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Consider the following international investment opportunity: Year 0 Year 1 Year 2 Year 3 -50.000 15.000 15,000 20,000 The current exchange rate is $1.60 =
Consider the following international investment opportunity: Year 0 Year 1 Year 2 Year 3 -50.000 15.000 15,000 20,000 The current exchange rate is $1.60 = 1.00. The inflation rate in the U.S. is 3 percent and in the euro zone 2 percent. The appropriate cost of capital to a U.S.-based firm for a domestic project of this risk is 8 percent. Find the euro-zone cost of capital to compute the dollar-denominated NPV of this project. Consider the following international investment opportunity: Year 0 Year 1 Year 2 Year 3 -50.000 15.000 15,000 20,000 The current exchange rate is $1.60 = 1.00. The inflation rate in the U.S. is 3 percent and in the euro zone 2 percent. The appropriate cost of capital to a U.S.-based firm for a domestic project of this risk is 8 percent. Find the euro-zone cost of capital to compute the dollar-denominated NPV of this project
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