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You are considering an investment in Pakistan. One dollar is currently worth 59 Pakistani rupees. An investment of 100 million rupees would generate a cash
You are considering an investment in Pakistan. One dollar is currently worth 59 Pakistani rupees. An investment of 100 million rupees would generate a cash flow of 20 million rupees per year for 20 years. Assume that the beta of this project with the US market is .60, and assume that the risk free rate in the US is 4%, and the market premium in the US is 7%. a. what is the NPV of this project? b. what problems might you have with realizing this NPV? c. how could you reduce the risk with an alternative financing strategy?
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