User Account

All Pages

Compute internal rate of return of norwegian project

Assignment Help Finance Basics
Reference no: EM132953405

Bartley Corp., a U.S. company, is considering the establishment of a subsidiary in Norway. The initial investment required by the parent is $6 million. If the project is undertaken, the company would terminate the project after 4 years. Barley's cost of capital is 14 percent, and the project has the same risk as Bartley's existing projects. All cash flows generated from the project will be remitted to the parent at the end of each year. Listed below are the estimated cash flows the Norwegian subsidiary will generate over the project's lifetime in Norwegian kroner (NOK) and Bartley's forecasted exchange rates for the kroner. The current spot rate of the kroner is $.13.Year 1Year 2Year 3Year 4CF in kroner 10,000,000 15,000,000 17,000,000 20,000,000Forecasted exchange rate$0.12$0.15$0.14$0.13

(1) Compute the internal rate of return of the Norwegian project?

(2) Should the company go ahead with the project? Explain.

Reference no: EM132953405

Questions Cloud

Record liabilities separately because helps users to assess : Given that most current liabilities will be settled with cash, it is important to identify and record these liabilities separately because helps users to assess
What is the net return on investment : A firm has a total asset of $1,000 during the year. During the same time, the firm has a net income (after-tax earnings) of $80.
Risk and return of resulting augmented endowment portfolio : 1. Differentiate between at the money, in the money, and out of the money put and call options.
What the depreciation expense for the first year will be : The computers after 4 years, at which time will be worth $2,000. If they use straight-line depreciation, the depreciation expense for the first year will be
Compute internal rate of return of norwegian project : Bartley Corp., a U.S. company, is considering the establishment of a subsidiary in Norway. The initial investment required by the parent is $6 million.
Compute the effective financing rate : A U.S. firm forecasts the euro's value as follows for the next year:
What will be the depreciation expense for maryam co : Estimated residual value of $2,500. The company uses double-declining-balance depreciation. What will be the depreciation expense for 2020?
How many rupees does the company need to raise : A U.S.-based subsidiary wants to raise $6.5 million by issuing a bond denominated in Pakistani rupees (PKR). The current exchange rate of the rupee is $.0065.
Which would most likely use a perpetual inventory system : Which would most likely use a perpetual inventory system? The company's year end is September 30. What should the depreciation expense be at September 30, 2020?

Reviews

Write a Review

Finance Basics Questions & Answers

  Aunt tillie has agreed to loan you 10000 for the down

aunt tillie has agreed to loan you 10000 for the down payment on a home. you have decided to structure the loan so that

  How the spread duration of a fixed income portfolio

Explain how the spread duration of a fixed income portfolio can be used to position the portfolio for a change in economic conditions.

  What will happen if the stock is not in equilibrium

If the risk-free rate is 9 percent and the expected rate of return on an average stock is 13 percent, what are the required rates of return on Stocks C and D? b. For Stock C, suppose the current price, P0, is $25; the next expected dividend, D1, is $..

  Find the value today of social security promise

Assume that Social Security promises you $47,000 per year starting when you retire 45 years from today (the first $47,000 will get paid 45 years from now).

  What is the present value of this investment if the discount

At the end of last year, the business had a net cash flows of $310,000. What is the present value of this investment if the discount rate is 15%?

  What is the impact based on the given facts

Biolsi Corporation, a C corporation, has two equal shareholders, Donna and Ashley. Biolsi earned $300,000 net profit during the current year and distributed.

  How much will each annual payment be

The savings account pays 8.31 percent per year, compounded annually. How much will each annual payment be?

  Determining the financing alternatives

Financing Alternatives" Please respond to the following:Imagine your attempt to receive venture capital has failed and you must look elsewhere.

  Why is it difficult to value assets

Why is it difficult to value assets, especially in a healthcare organization?

  Lawsuit relating to its transactions with a counterparty

Consider the following two events: (a) a bank loses $1 billion from an unexpected lawsuit relating to its transactions with a counterparty and (b) an insurance company loses $1 billion because of an unexpected hurricane in Texas.

  What is the valuation of the bond if the market interest

you need to present to your client alice cartwright some investment options for her to choose from. her choices are

  Using the following treasury bond information

Using the following Treasury Bond information for a bond maturing in August 2029, What is its current yield? What is its yield to maturity?  What is the bid-ask spread?August 15, 2029  Coupon 6.125  Bid 123:13  Ask 123:15  chg -58  Asked Yield 4.2790

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd