Wisconsin Wine and Wurst (3W) Wisconsin Wine and Wurst (U.S.) expects to receive cash dividends from a Germany joirt venture over the coming five years. The first dividend, to be paid in one year expected to be 420,000. The dividend is then expected to remain flat for four additional years. The current exchange rate (December 4, 2018) is $1.25/E.3W's weighted average cost of capital is 9% a. What is the present value of the expected euro dividend stream if the euro is expected to appreciate 6.00% per annum against the dollar? b. What is the present value of the expected dividend stream if the euro were to depreciate 7.00% per annum against the dollar? Bankers Club Bankers Club Co. wants to invest in a project in Poland to make rum. Bankers Club would require an initial investment of 7,000,000 zloty. It is expected to generate cash flows of 9,000,000 zloty at the end of one year. The spot rate of the zloty is $.30, and Bankers Club thinks this exchange rate is the best forecast of the future. However, there are 2 forms of country risk. First, there is a 12% chance that the Polish government will require that the zloty cash flows earned by Bankers Club at the end of one year be reinvested in Poland for one year before it can be remitted (so that cash would not be remitted until 2 years from today). In this case, Bankers Club would earn 1% after taxes on a bank deposit in Warsaw during that second year. Second, there is a 40% chance that the Poland will impose a special remittance tax of 420,000 zloty at the time that Bankers Club Co. remits cash flows earned in Poland back to the U.S Assume that the two forms of country risk are independent. The required rate of return on this project is 16%. There is no salvage value, what is the expected value of the project's net present value? What is your recommendation to Bankers Club Co? Brower, Inc. Brower, Inc. just constructed a manufacturing plant in Ghana. The construction cost 9 billion Ghanian cedi. Brower intends to leave the plant open for three years. During the three years of operation cedi cash flows are expected to be 3 billion cedi, 3 billion cedi, and 2 billion cedi, respectively. Operating cash flows will begin one year from today and are remitted back to the nt at the end of each year. At the end of the third year, Brower expects to sell the plant for 5 pare billion cedi. Brower has a required rate of return of 17 percent. It currently takes 8,700 cedi to buy one U.S. dollar, and the cedi is expected to depreciate by 5 percent per year. NPV for this project. Should Brower build the plant? ur answer change if the value of the cedi was expected to remain value of 8,700 cedis per U.S. dollar over the course of the three years? Should Brower construct the plant then? Hoosier, Inc.: How Country Risk Affects NPV. Hoosier, Inc., is planning a project in the United Kingdom. It would lease space for one year in a shopping mall to sell expensive clothes manufactured in the U.S. The project would end in one year, when all earnings would be remitted to Hoosier, Inc. Assume that no additional corporate taxes are incurred beyond those imposed by the British government. Since Hoosier, Inc.,, would rent space, it would not have any long-term assets in the United Kingdom, and expects the salvage (terminal) value of the project to be about zero. Assume that the project's required rate of return is 18 percent. Also assume that the initial outlay required by the parent to fill the store with clothes is $200,000. The pretax earnings are expected to the 300,000 at the end of one year. The British pound is expected to be worth $1.60 at the end of one year, when the after-tax earnings are converted to dollars and remitted to the United States. The following forms of country risk must be considered The British economy may weaken (probability-30%), which would cause the expected pretax earnings to be 200,000. The British corporate tax rate on income earned by U.S. firms may increase from 40 percent to 50 percent (probability 20 percent). These two forms of country risk are independent. Calculate the expected value of the project's net present value (NPV) and determine the probability that the project will have a negative NPV