Calculate the project NPV and advice ABC Ltd

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Question - ABC Ltd, a UK company plans to develop a subsidiary in France to sell sandwich. The Initial cost of the project is £20,000, which will be financed by the parent company. The assumption is that the exchange rate will remain constant at €1.2/£ for the 3 years life of the project. The project cashflows for the next three years are €10,000; €8,000 and €6,000 respectively. The required rate of return in Germany is 10%. Calculate the project NPV and advice ABC Ltd whether the project should be executed.

Reference no: EM132979170

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