CONSIDER A PROJECT TO INVEST ABROAD, THE SIZE AND TIMING OF THE AF...

20. - BT THANH TOAN QUOC TE MULTINATIONAL FINANCIAL MANAGEMENT DAP AN
BT THANH TOAN QUOC TE MULTINATIONAL FINANCIAL MANAGEMENT DAP AN
20. Consider a project to invest abroad, the size and timing of the after-tax incremental cash flows are shown in the following table: Year 0 1 2 3 Cash Flow -€500,000 €100,000 €100,000 €500,000 Estimate the NPV of the project to the shareholders of a U.S. firm. The inflation rate in dollars is two percent per year, the inflation rate in euros is three percent. The spot exchange rate is $1.08 = €1.00 and the discount rate appropriate for projects of this risk (denominated in dollars) is 10 percent. a. $38,767.63 b. €49,211.12 c. $35,895.95 d. None of the above.