Answered: A foreign investment project with… | bartleby

International Financial Management

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter14: Multinational Capital Budgeting

Section: Chapter Questions

Problem 3IEE

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International Finance Management

A foreign investment project with initial investment USD1,500,000 is
expected to produce net cash flows in AUD6,500,000 for each year.
The required rate of return is 12 percent and the exchange rate is as
follows :
Forecasted Exchange
USDO.7331/AUD
USDO.7450/AUD
Year
1
USDO.7560/AUD
USD0.7660/AUD
4
Calculate the net present value and salvage value for the end of
operation. Decide whether this project is accept or reject and give a
reason.

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