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You have an investment opportunity in Japan. It requires an investment of $0.96 million today and will produce a cash flow of yen 113 million
You have an investment opportunity in Japan. It requires an investment of $0.96 million today and will produce a cash flow of yen 113 million in one year with no risk. Suppose the risk-free interest rate in the United States is 3.6%, the risk-free interest rate in Japan is 1.3%, and the current competitive exchange rate is yen 110 per dollar. What is the NPV of this investment? Is it a good opportunity? What is the NPV of this investment?
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