Question
You want to invest in a project in Wonderland. The project has an initial cost of W748,000. It is expected to produce cash inflows of
You want to invest in a project in Wonderland.
The project has an initial cost of W748,000.
It is expected to produce cash inflows of W305,000 a year for 3 years.
The project will be worthless after that.
The expected inflation rate in Wonderland is 2% while it is 4% in the U.S.
The applicable interest rate for a project like this in Wonderland is 13%.
The current spot exchange rate is W1.0000 = $5.4321.
What is the Net Present Value of this project in Wonderland's currency (i.e., in "W")?
Increase decimal places for any intermediate calculations, from the default 2 to 6 or higher, and only round your final answer to TWO decimal places: for example, 10,000.23. Do NOT use "currency units" in your answer.
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