What is the net present value and rate of return of project

Assignment Help Financial Management
Reference no: EM132802978

Problem - FOREIGN CAPITAL BUDGETING - Sandrine Machinery is a Swiss multinational manufacturing company. Currently, Sandrine's financial planners are considering undertaking a 1-year project in the United States. The project's expected dollar-denominated cash flows consist of an initial investment of $2,000 and a cash inflow the following year of $2,400. Sandrine estimates that its risk-adjusted cost of capital is 10%. Currently, 1 U.S. dollar will buy 0.96 Swiss franc. In addition, 1-year risk-free securities in the United States are yielding 3%, while similar securities in Switzerland are yielding 1.50%.

Required -

a. If this project was instead undertaken by a similar U.S.-based company with the same risk-adjusted cost of capital, what would be the net present value and rate of return generated by this project?

b. What is the expected forward exchange rate 1 year from now?

c. If Sandrine undertakes the project, what is the net present value and rate of return of the project for Sandrine?

Reference no: EM132802978

Questions Cloud

What are the exercise value and premium of the call option : A call option on the stock with a $25 strike price currently sells for $12. What are the exercise value and the premium of the call option
Prepare the consolidation elimination journal entry for year : The following account balances existed at 30 June 2020, Prepare the consolidation elimination journal entry for the year ending 30 June 2020.
How much is the materials cost per unit : If materials added and beginning Work in Process materials cost totals $20460, how much is the materials cost per unit if the weighted-average method is used?
What are the determinants of acceptable profits : In the business model the cost structure is said to be determined to allow for acceptable profits. What are the determinants of acceptable profits?
What is the net present value and rate of return of project : FOREIGN CAPITAL BUDGETING - If Sandrine undertakes the project, what is the net present value and rate of return of the project for Sandrine
What is a non-controlling interest : What portion of the intra-group transactions between the parent entity and the subsidiary entity will need to be eliminated on consolidation?
Describe three methods for communicating information : Describe three methods for communicating information and ideas to a range of stakeholders.
Introduce ways to improve work relationships : Explain how to monitor, analyse and introduce ways to improve work relationships.
Navigating the cultural minefield : For this assignment, you will need to read one of the provided articles and fill in the blank of the outline format that has been provided to you.

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd