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Find the present value of expected euro dividend stream

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Reference no: EM131708444

Question: Grenouille Properties. Grenouille Properties (U.S.) expects to receive cash dividends from a French joint venture over the coming three years. The first dividend, to be paid December 31, 2011, is expected to be 720,000. The dividend is then expected to grow 10.0% per year over the following two years. The current exchange rate (December 30, 2010) is $1.3603/ . Grenouille's weighted average cost of capital is 12%.

a. What is the present value of the expected euro dividend stream if the euro is expected to appreciate 4.00% per annum against the dollar?

b. What is the present value of the expected dividend stream if the euro were to depreciate 3.00% per annum against the dollar?

Reference no: EM131708444

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