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Suppose that Swiss pharma, Roche, is evaluating a proposal to build a new facility in the United States. To calculate the projects net present value,

Suppose that Swiss pharma, Roche, is evaluating a proposal to build a new facility in the United States. To calculate the projects net present value, Roche forecast the following dollar cash flows from the proposed project:

CASH FLOWS (in U.S dollars) ($millions)

C0

C1

C2

C3

C4

C5

-1,300

400

450

510

575

650

The expected average cost of capital is 9.5%. The spot rate of exchange of the Swiss Franc is 1.3/$.

In the event your group is pessimistic about the outlook for the U.S dollar, what actions might you take to protect your investment should you move forward with this project?

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