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The Hershey Company from Hershey, Pennsylvania, is evaluating a proposal to build a new plant in the United Kingdom. The expected cash flows in pounds
The Hershey Company from Hershey, Pennsylvania, is evaluating a proposal to build a new plant in the United Kingdom. The expected cash flows in pounds are as follows: Year 0, -50; Year 1, 25; Year 2, 35; Year 3, 40. The discount rate in BP is 14 percent, and the discount rate in $US is 12 percent. The spot rate is $U$1.99/BP. a) Calculate the NPV of the project in BP. b) Calculate the NPV in $US. c) Alternatively, The Hershey Company could also invest in a new plant in the United States. This invest- ment would result in lower initial costs of -30. Which project should your company pursue
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