Will project meet the company economic decision criterion

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Reference no: EM131506672

Question: An automobile manufacturing company in Country X is considering the construction and operation of a large plant on the eastern seaboard of the United States. Their MARR = 20% per year on a before-tax basis. (This is a market rate relative to their currency in Country X.) The study period used by the company for this type of investment is 10 years. Additional information is provided as follows:

• The currency in Country X is the Z-Kron.

• It is estimated that the U.S. dollar will become weaker relative to the Z-Kron during the next 10 years. Specifically, the dollar is estimated to be devalued at an average rate of 2.2% per year.

• The present exchange rate is 92 Z-Krons per U.S. dollar.

• The estimated before-tax net cash flow (in U.S. dollars) is as follows:

Based on a before-tax analysis, will this project meet the company's economic decision criterion?

Reference no: EM131506672

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