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Calculate the npv of project using foreign currency approach

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Reference no: EM132768545

ABC Ltd. is considering a project in US, which will involve an initial investment of US $1,10,00,000. The Project will have 5 years of life. Current spot exchange rate is `48/$. The risk free rate in US is 8% and the same in India is 12%.

Cash inflows from the project are as follows:

Year Cash Inflow

1 $20,00,000

2 $25,00,000

3 $30,00,000

4 $40,00,000

5 $50,00,000

Problem 1: Calculate the NPV of the project using foreign currency approach.

Reference no: EM132768545

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