Question
You want to invest in a project in LaLaLand. The project has an initial cost of LLL768,000. It is expected to produce cash inflows of
You want to invest in a project in LaLaLand.
The project has an initial cost of LLL768,000.
It is expected to produce cash inflows of LLL356,000 a year for 3 years.
The project will be worthless after that.
The expected inflation rate in LaLaLand is 4% while it is only 2% in the U.S.
The applicable interest rate for a project like this in LaLaLand is 12%.
The current spot exchange rate is LLL1.0000 = $2.3456.
What is the Net Present Value of this project in LaLaLand's currency (i.e., in "LLL")?
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Property Finance
Authors: David Isaac
2nd Edition
0333987144, 978-0333987148
