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What is the net present value of project in canadian dollars

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You want to invest in a project in Canada. The project has an initial cost of C$1.6 million and is expected to produce cash inflows of C$750,000 a year for 3 years. The project will be worthless after the 1st 3 years. The expected inflation rate in Canada is 5% while it is only 3.5% in the U.S. The applicable interest rate for the project in Canada is 12%. The current spot rate is C$1 = $0.8637. What is the net present value of this project in Canadian dollars using the foreign currency approach?

Reference no: EM132666929

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