Project in swedish krona using the foreign currency approach

Assignment Help Financial Management

Reference no: EM131899128

a) You want to invest in a riskless project in Sweden. The project has an initial cost of SKr2.1 million and is expected to produce cash inflows of SKr810,000 a year for 3 years. The project will be worthless after the first 3 years. The expected inflation rate in Sweden is 2 percent while it is 5 percent in the U.S. A risk-free security is paying 6 percent in the U.S. The current spot rate is $1 = SKr7.55. What is the net present value of this project in Swedish Krona using the foreign currency approach? Assume that the international Fisher effect applies.

Reference no: EM131899128

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