Question
You have an investment opportunity in Japan. It requires an investment of $ 1.00$1.00 million today and will produce a cash flow ofyen 114114 million
You have an investment opportunity in Japan. It requires an investment of $ 1.00$1.00
million today and will produce a cash flow ofyen 114114
million in one year with no risk. Suppose therisk-free interest rate in the United States is 4.0 %4.0%,
therisk-free interest rate in Japan is 2.0 %2.0%,
and the current competitive exchange rate is yen 110110
per dollar. What is the NPV of thisinvestment? Is it a goodopportunity?
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Corporate Finance
Authors: Jonathan Berk and Peter DeMarzo
3rd edition
978-0132992473, 132992477, 978-0133097894
