Calculate the net present value, Corporate Finance

Here is the pro-forma income statement for Semen Indonesia, an overseas venture that Cemex is planning to invest in.

2252_44.png


 In this exercise, you will need to evaluate the investment decision from the project point of view.  Some assumptions you may need are:

 ·  Initial Capital Expenditure (investment) = 25,000,000 million Rupiah

·   Net Working Capital requirement: 10% of the expected sales for each year, allocated in the beginning of the year.

·   Terminal Value at Year 5:  22,000,000 million Rupiah

·   Indonesian Corporate Income Taxes:  30%

·   Mexican Corporate  Income Taxes:  35%

·   Capital Structure: 50% debt, and 50% equity

·   Risk-free Rate in Indonesia:  30%

·   Risk-free Rate in the U.S.:  5%

·   Market Risk Premium in Indonesia:  10%

·   Market Risk Premium in the U.S.:  7%

·   Cost of debt used to finance the project:  38%

·   Cemex's beta in the U.S. market: 1.0%

·   Weighted average of the betas of the cement companies in Indonesia:  1.2

a)     Please prepare the cash flow statement for the project (project point of view)

b)     What the discount rate you would use to discount these cash flows (project point of view)?

c)      Please calculate the Net Present Value (NPV) of this international investment for the project point of view.

 

Posted Date: 3/16/2013 1:34:44 AM | Location : United States







Related Discussions:- Calculate the net present value, Assignment Help, Ask Question on Calculate the net present value, Get Answer, Expert's Help, Calculate the net present value Discussions

Write discussion on Calculate the net present value
Your posts are moderated
Related Questions

Question: (a) In any year, the rate of interest on funds invested with a given insurance company is independent of the rates on interest in all previous years. Each year th

It is a dividend on a share of cumulative preferred stock that has not still being paid to the shareholder. Accumulated dividends are the product of dividends that are carried forw


differentiate between pricing and allocative efficincy

you buy a car for ths 10000000 to be repaid in 3 years, with annua interest of 12%. preapare a loan amortization table

develop a corporate finance project and dissices all ground of financials areas

National Australia Bank is listed on the Australian Securities Exchange with code NAB. The company has 2.2731 billion shares outstanding and the closing price on 7 Sept 2012 was $2

Assume that the average age of the worker is 25 years old. Typically, retirement is at 65. The firm provides a $2000 monthly payment for 25 years for retirees (i.e., 300 monthly

Question: Trade finance is much facilitated by banks' intervention as guarantors for the execution of financial commitments on behalf of importers. Banks provide a large variet