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One of your clients, a wealthy Houstonian, asks you to evaluate the following investment in a mining venture in Mexico. The investment (outlay) is 2 million dollars. The venture is expected to generate free cash flows of MP 10 million per year for the next three years at which point it will cease. There is no salvage value. The current spot rate is $0.08/MP, and currently nominal interest rates on one- through three-year debt instruments are as follows:
Term (yrs) US Mexico
1 6% 8%
2 3% 7%
3 5% 4%
Using Excel answer the following questions. You must use Excel cell referencing formulas where noted (in blue) in the Excel sheet.
1-Assuming the International Fisher Effect holds, Find the NPV of the project (in dollars) if your client requires a 20% rate of return. Is the project acceptable?
2-Assuming the International Fisher Effect holds, Find the NPV of the project (in dollars) if your client requires a 10% rate of return.
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Consider a standard mortgage (360 months) with monthly payments and a nominal rate (monthly compounding) of 5.70%. What portion of the payments during the first 31 months goes toward interest? How Would I figure this out?
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Which of the following argued that the value of a firm is independent of its capital structure?
You're the director of purchasing at a telecommunications company in Seattle and you've just gone to meet your sister-in-law for coffee at a little café off Rush Street. Earlier this week you arrived in Chicago to attend the National Association of P..
You have $100,000 to invest in either Stock D, Stock F, or a risk-free asset. You must invest all of your money. Your goal is to create a portfolio that has an expected return of 12.3 percent. Assume D has an expected return of 15.8 percent, F has an..
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