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Suppose your firm does business in France and is considering a 4-year French project with an initial cost of EUR 5 Million. Your firm makes
Suppose your firm does business in France and is considering a 4-year French project with an initial cost of EUR 5 Million. Your firm makes the following projections for EUR denominated Cash Flows (in Millions) from the French project.
Year 0 1 2 3 4 Initial Investment -5
OCF
2.5 2.0 1.5 0.5 Salvage Value
1.3
Suppose your firm requires a return of 12% on European projects and that you believe the USD/EUR exchange rate will average USD 1.15/EUR over the 4-year period. WHAT IS THE NPV OF THIS PROJECT IN USD?
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