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You work for an Israeli company that is considering an investment in China's Sichuan province. The investment yields expected after-tax Chinese new yuan cash flows

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You work for an Israeli company that is considering an investment in China's Sichuan province. The investment yields expected after-tax Chinese new yuan cash flows (in millions) as follows: Expected inflation is 6 percent in shekels and 3 percent in yuan. Required returns for this risk class are i^ILS = 15 percent in Israeli shekels and 11.745 percent in yuan. The spot exchange rate is S^ILS/CNY_0 = ILS 0.5526/CNY. Assume the international parity conditions hold. Calculate V^ILS_0|i^CNY by discounting at the appropriate risk-adjusted yuan rate i^CNY and then converting into shekels at the current spot rate. Calculate V^ILS_0|i^ILS by converting yuan into shekels at expected future spot rates and then discounting at the appropriate rate in shekels

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