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You want to invest in a project in LaLand. The project has an initial cost of LLL783,000 and is expected to produce cash inflows of
You want to invest in a project in LaLand. The project has an initial cost of LLL783,000 and is expected to produce cash inflows of LLL398,000 a year for 3 years. The project will be worthless after that. The expected inflation rate in LaLaLand is 4.5% while it is only 2.5% in the U.S. The applicable interest rate for a project like this in LaLand is 11%. The current spot exchange rate is LLL1 = $3.548. What is the Net Present Value of this project in dollars?
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