### What is the break-even salvage value

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##### Reference no: EM132051982

Lynx is considering establishing a two-year project in New Zealand with a \$30 million initial investment. The firm's cost of capital is .12. The required rate of return on this project is 0.15. The project is expected to generate cash flows of NZ\$10,500,000 in Year 1 and NZ\$30,300,000 in Year 2, excluding the salvage value. Assume no taxes, and a stable exchange rate of \$0.58 per NZ\$ over the next two years. All cash flows are remitted to the parent. What is the break-even salvage value?

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