Question
Use the folllowing the answer the next two questions. XYZ corporation (US firm) is evaluating a project with the following expected cash flows and discount
Use the folllowing the answer the next two questions. XYZ corporation (US firm) is evaluating a project with the following expected cash flows and discount rate(K):
Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | |
|
| K= .10 | K=.12 | K=.15 | K=.18 |
Dollars | -500,000 | 500,000 | 50,000 | 500,000 | 250,000 |
Yen | -1,000,000 | 2,500,000 | 500,000 | 500,000 | -700,000 |
Pounds | -100,000 | 60,000 | -10,000 | -100,000 | -200,000 |
Exchange rates over this four year period are as follows:
Exchange Rate | Year 0 | Year 1 | Year 2 | Year 3 | Year 4 |
Yen | .005USD/JY | .002USD/JY | .005USD/JY | .005USD/JY | .008USD/JY |
Pounds | 2.2 USD/BP | 2 USD/BP | 2.7 USD/BP | 2.5 USD/BP | 2.2 USD/BP |
Find the initial outlay (year 0 cost) in dollars for the project. Round intermediate steps and your final answer to four decimals. Do not use the dollar sign when entering your answer.
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