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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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