User Account

All Pages

What is the npv

Assignment Help Finance Basics
Reference no: EM132051985

Pulse is considering acquisition of a company in London. Its initial investment would be $3.9 million. It will reinvest all the earnings in the company. It expects that at the end of 8 years, it will sell the company for 17 million euros after capital gains taxes are paid. The spot rate of the euro is $1.13 and is used as the forecast of the euro in the future years. Pulse has no plans to hedge its exposure to exchange rate risk. The annualized U.S. risk-free interest rate is .05 regardless of the maturity of the debt, and the annualized risk-free interest rate on euros is .07, regardless of the maturity of debt. Assume that interest rate parity exists. Pulse's cost of capital is 0.15. It plans to use cash to make the acquisition. What is the NPV?

Reference no: EM132051985

Questions Cloud

Foster consolidated is expecting capital rationing : Foster Consolidated is expecting capital rationing to last for the next 3 years. The company's cost of capital is 10%
Is this deceptive advertising : Is this deceptive advertising? Is it unethical to advertise a future value like this without a disclaimer?
Describe the importance of maintaining integrity rules : Describe the importance of maintaining integrity rules throughout the database structure. Create at least three examples of common relationships.
Purposes of personal financial statements : What are the main purposes of personal financial statements? please explain
What is the npv : Assume that interest rate parity exists. Pulse's cost of capital is 0.15. It plans to use cash to make the acquisition. What is the NPV?
Net present value of project : What is the net present value of this project if the spot rate of the Australian dollar for the two years is forecasted to be $.55 and $.60, respectively?
What is the number one priority facing us citizens today : Has the president's vision of life following 9-11 come true? Why or why not? What is the number one priority facing US citizens today?
What is the break-even 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.
Project expected npv if it can be abandoned : Once the project is abandoned, the company would no longer receive any cash inflows from it. What is the project's expected NPV if it can be abandoned?

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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