Just solve just the first part worth 10 points 3. (35...
90.2K
Verified Solution
Link Copied!
Question
Accounting
Just solve just the first part worth 10 points
3. (35 points) Your firm is based in France and is considering an investment opportunity in the United States. The project will last for 2 years and require an investment of USD 10,000,000 at time zero. This initial investment has to be depreciated by 50% the first year and the remaining 50% in the second year. Revenues are forecasted to be USD 8,000,000 and USD 12,000,000 in year 1 and year 2, respectively. Costs will amount to USD 1,500,000 in both years. Terminal value is expected to be zero. Additional information: tax rate is 30% in US and 40% in France. Current USD USD spot exchange rate is s EUR1.3. Inflation rate in France is 4% and in the US is 6%. EUR a) (10 points) Compute the NPV of the project in EUR using the WACC as discount rate. Assume the WACC in EUR to be 4%. Should the French company accept or reject the project
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
