Calculate net present value of proposed expansion project

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International Foods Corporation, a U.S.-based food company, is considering expand- ing its soup-processing operations in Switzerland. The company plans a net investment of $8 million in the project. The current spot exchange rate is SF6.25 per dollar (SF ¼ Swiss francs). Net cash flows for the expansion project are estimated to be SF5 million for 10 years and nothing thereafter. Based on its analysis of current conditions in Swiss capital markets, International Foods has determined that the applicable cost of capital for the project is 16 percent. Calculate the net present value of the proposed expansion project.

Reference no: EM13928256

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