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You want to invest a project in Canada. The project has an initial cost of C1.6million and is expected to produce cash inflows of C750000
You want to invest a project in Canada. The project has an initial cost of C1.6million and is expected to produce cash inflows of C750000 a year for 3 years. The project will be worthless after the first 3 years. The expected inflation rate in Canada is 5% while it is only 3.5% in the U.S. The applicable interest rate for the project in Canada is 12%. The current spot rate is C$ 1 = 0.8637. What is the net present value of this project in Canadian dollars using the foreign currency approach?
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