A US MNC has invested in a project in Brazil for three years. 10m Brazilian Real were to be remitted every year for this project for next 3 years. The funds cannot be remitted due to blocked funds and company will have to reinvest it at 4% locally. Withholding tax rate and discount rate are 10% each. The exchange rate will be a constant value of $0.24. Calculate the NPV of this project if parent company invested $5m initially. $1,837,002 -$1,048,710 $799,392 -$65,857
A US MNC has invested in a project in Brazil for three years. 10m Brazilian Real were to be remitted every year for this project for next 3 years. The funds cannot be remitted due to blocked funds and company will have to reinvest it at 4% locally. Withholding tax rate and discount rate are 10% each. The exchange rate will be a constant value of $0.24. Calculate the NPV of this project if parent company invested $5m initially. $1,837,002 -$1,048,710 $799,392 -$65,857
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 22P
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A US MNC has invested in a project in Brazil for three years. 10m Brazilian Real were to be remitted every year for this project for next 3 years. The funds cannot be remitted due to blocked funds and company will have to reinvest it at 4% locally. Withholding tax rate and discount rate are 10% each. The exchange rate will be a constant value of $0.24. Calculate the
$1,837,002 |
||
-$1,048,710 |
||
$799,392 |
||
-$65,857 |
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