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
Problem (a) The yields to maturity on five zero-coupon bonds are given below:                    Years to Maturity                 Yield (%)

Measuring the Behaviour of Stock in the Estimation Window and the Event Window As its name implies, the estimation window is used to estimate a model of the stock's returns un

Firm A has $10,000 in assets entirely financed with equity. Firm B also has $10,000 in assets, but these assets are financed by $5,000 in debt (with a 10 percent rate of interest)

Course assessment: Company directors often believe that the stock market fails "correctly" to value the firms they manage, while investors are often alarmed by the volatility i

I have been given 3 different types of projects. They state the IRR and how much the project will add. The question goes on to give a WACC with break points. The question wants

This assignment is the third part of your course project. Using the two companies that are from the same industry, complete the following: Required: 1.Find their latest annual r

Can you hepl me with financial a accounting assignment?

Nipissing, Inc,, is considering a new three year expansion project that requires an initial fixed asset investment of $2.4 million. The fixed asset falls in CCA Class 8 with a a 20

i need to find out how quickly i could get some answers to stock valuation questions on antamina mines case and how cheaply

Problem: Firm 1 produces cars and the total cost of producing q cars is given as C(q) = 2q 2 + 5q. a) Assuming the ?rm operates in a perfectly competitive market. Write down th