Question
You are the CEO of an American company considering investing in Brazil. Your BRL cost of...
You are the CEO of an American company considering investing in Brazil. Your BRL cost of capital is 19.3%, and your USD cost of capital is 15%. The project you are considering will cost 10M BRL to set up, and will produce free cash flows of 1.4M BRL per year in perpetuity, starting one year from today. Brazil and the US have the same inflation rate, and the current spot exchange rate is USD 0.21 per BRL. What is the NPV of this project (in the appropriate currency) from the parent viewpoint?
Homework Answers
Answer #1
Not the answer you're looking for?
Similar Questions
You are the CEO of an American company considering investing in Brazil. Your BRL cost of...
You are the CEO of an American company considering investing in
Brazil. Your BRL cost of capital is 15.8%, and your USD cost of
capital is 13.9%. The project you are considering will cost 10M BRL
to set up, and will produce free cash flows of 1.4M BRL per year in
perpetuity, starting one year from today. Brazil and the US have
the same inflation rate, and the current spot exchange rate is USD
0.16 per BRL. What is the...
You are the CEO of an American company considering investing in Brazil. Your BRL cost of...
You are the CEO of an American company considering investing in
Brazil. Your BRL cost of capital is 15.6%, and your USD cost of
capital is 13%. The project you are considering will cost 49M BRL
to set up, and will produce free cash flows of 1.6M BRL per year in
perpetuity, starting one year from today. Brazil and the US have
the same inflation rate, and the current spot exchange rate is USD
0.2 per BRL. What is the...
Your company is contemplating on investing in a manufacturing facility in China. You are charged with...
Your company is contemplating on investing in a manufacturing
facility in China. You are charged with doing the financial
analysis for this project. You expect the cash flows (in Chinese
RMB) for this project to last indefinitely. You estimated the
following cash flows for 2019-2024 and that the cash flows will
grow at a constant rate starting 2025
Year
FCF
Other Data
2019
-50,000,000 RMB
Growth rate of RMB FCF starting 2025 = 2%
2020
6,000,000 RMB
Cost of Capital...
Your US-based firm is considering investing in a project run by its Canadian subsidiary. This project...
Your US-based firm is considering investing in a project run by
its Canadian subsidiary. This project will cost CAD 26M to set up
today and will pay out CAD 29M in one year. This project will be
all equity financed, with the parent firm taking a 70% equity
stake, and the Canadian subsidiary will be taking a 30% equity
stake. The spot rate is currently USD 0.77 per CAD, and you expect
that it will be USD 0.84 per CAD...
ABC Inc. has a weighted average cost of capital (WACC) of 11.10%. It is considering investing...
ABC Inc. has a weighted average cost of capital (WACC) of
11.10%. It is considering investing in a new project with the same
riskiness as the firm. The project will generate free cash flows in
year 1 of $13,650,000. The free cash flows are expected to grow by
3.70% in perpetuity. The cost of the project is $172,000,000. This
cost will be incurred at time 0, today. What is the net present
value (NPV) of the project?
You are considering investing in a project in Mexico. The project will be a 2 year...
You are considering investing in a project in Mexico. The
project will be a 2 year project, has an initial cost of 100K USD,
and expected after tax profit of 1 million MXP per year. You expect
the MXP to be valued at 0.12 USD/MXP.
There are two major risks that you think have the potential to
significantly affect project performance, which you assume are
independent:
* You think with probability of 0.19 that the MXP will depreciate
to 0.1...
You are considering investing in a start up project at a cost of $150,000. You expect...
You are considering investing in a
start up project at a cost of $150,000. You expect the project to
return $550,000 to you in seven years. Given the risk of this
project, your cost of capital is 22%.
What is the NPV of the project
What is the IRR of the project
pls no excel
1. Net present value. You are considering investing in solar panels for your home. The upfront...
1. Net present value. You are considering investing in solar
panels for your home. The upfront cost today of purchasing the
panels is $12,000. The benefit you receive from the panels is equal
to $1,000 per year starting next year and continuing in perpetuity.
Calculate the year that these solar panels pay for themselves
(i.e., have a positive NPV). Consider three different discount
rates: 3%, 5%, and 10%. (a) Write an equation for the net present
value of the investment...
An Australian company is considering making a foreign capital expenditure in New Zealand. The cost of...
An Australian company is considering making a foreign capital
expenditure in New Zealand. The cost of the project is NZD 1m and
it is expected to generate cash flows of NZD 350,000, NZD 300,000
and NZD 650,000 over three years.
The inflation rate in New Zealand is 3.2%pa and the inflation
rate in Australia is 4.1%pa. The inflation rates are forecasted to
be unchanged over the investment horizon.
The firm's cost of capital in Australian dollars is 12.5%. The
current...
Suppose you are the CEO of MotorABC, and you are considering investing in the following project....
Suppose you are the CEO of MotorABC, and you are considering
investing in the following project. The life cycle of the project
takes 6 years. During the first three years, the project requires
fixed investments, and the project generates risky earnings
throughout its life cycle.
The investments committed to the project are shown in the
following table:
Year
0
1
2
3
Investments (million)
6
6
6
The expected earnings from the project are shown in the
following table:
Year...
ADVERTISEMENT
Need Online Homework Help?
Get Answers For Free
Most questions answered within 1 hours.
ADVERTISEMENT
Active Questions
asked 11 minutes ago
asked 11 minutes ago
asked 21 minutes ago
asked 23 minutes ago
asked 27 minutes ago
asked 28 minutes ago
asked 28 minutes ago
asked 28 minutes ago
asked 30 minutes ago
asked 37 minutes ago
asked 42 minutes ago
asked 1 hour ago