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Redy Tody, an Indian- based pharmaceutical firm, is considering a project in Canada. The following table...

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Finance

Redy Tody, an Indian- based pharmaceutical firm, is consideringa project in Canada. The following table lists foreign currency(CAD) cash flows. The CAD is currently trading at CADINR equals 50.Assume that future spot rates are equal to the current spot rate.The WACC of the firm is 11 percent.
Year                       CashFlows (CAD)
0                           -200,000
1–4                       50,000
5                            100,000
Calculate the NPV of the project in INR.

Answer & Explanation Solved by verified expert
3.9 Ratings (458 Votes)

Ans $ 14467.42

Year Project Cash Flows (i) DF@ 11% DF@ 11% (ii) PV of Project A ( (i) * (ii) )
0 -200000 1 1                (2,00,000.00)
1 50000 1/((1+11%)^1) 0.901                     45,045.05
2 50000 1/((1+11%)^2) 0.812                     40,581.12
3 50000 1/((1+11%)^3) 0.731                     36,559.57
4 50000 1/((1+11%)^4) 0.659                     32,936.55
5 100000 1/((1+11%)^5) 0.593                     59,345.13
TOTAL                     14,467.42

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Transcribed Image Text

Redy Tody, an Indian- based pharmaceutical firm, is consideringa project in Canada. The following table lists foreign currency(CAD) cash flows. The CAD is currently trading at CADINR equals 50.Assume that future spot rates are equal to the current spot rate.The WACC of the firm is 11 percent.Year                       CashFlows (CAD)0                           -200,0001–4                       50,0005                            100,000Calculate the NPV of the project in INR.

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