Compute the net present value of the project

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Reference no: EM13107695

Petrus Company has an exclusive opportunity to invest in a two-year project in Australia. The project is predictable to generate 1,000,000 Australian dollars in the first year and 2,000,000 Australian dollars in the second. Petrus would have to invest $1,500,000 in the project. Petrus has resolute that the cost of capital for similar projects is 14%. Compute the net present value of this project if the spot rate of the Australian dollar for the two years is forecasted to be $.55 and $.60 respectively? Display how you derive answer. Must Petrus invest in the project? Why or why not?

Reference no: EM13107695

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