Considering investing in project

Assignment Help Financial Management

Reference no: EM132054530

You are considering investing in a project in Mexico. The project will be a 2 year project, has an initial cost of 100K USD, and expected after tax profit of 1 million MXP per year. You expect the MXP to be valued at 0.12 USD/MXP. There are two major risks that you think have the potential to significantly affect project performance, which you assume are independent: * You think with probability of 0.16 that the MXP will depreciate to 0.1 USD/MXP. * You also think that with probability of 0.24 the Mexican economy will weaken substantially, in which case the project's after tax annual cash flow will be only 600K MXP. Your required return on the project is 18%. What is the expected value of the NPV of this project, as measured in USD?

Reference no: EM132054530

Questions Cloud

What should be the one year forward rate on the sgd : If interest rate parity is in effect, what should be the 1 year forward rate on the SGD?

Decide to borrow eur at relatively low rates : You decide to borrow EUR at the relatively low rates, and invest in the higher THB rate. What will be your profit as measured in EUR?

Bid-ask spread-what is your net profit on position : The SGD is quoted at bid price of 0.85 USD/SGD, with a 1 penny bid-ask spread, what is your net profit on this position?

Relationship between stock return and the market return : The slope of the fitted line that shows the relationship between a stock's return and the market's return is the:

Considering investing in project : You are considering investing in a project in Mexico. What is the expected value of the NPV of this project, as measured in USD?

Some dividend reinvestment plans : Some dividend reinvestment plans allow the stockholder to acquire share of stock

Terms of cost of capital versus investor yields : Discuss corporate bond interest in terms of cost of capital versus investor yields. Also, discuss municipal bond interest in terms of investor yields.

Expected percent change in value of british pound : What is the expected percent change in the value of the British pound relative to the dollar, over the course of the year?

Sales per year for overhauling to be preferred alternative : Assume your company has $100K in its cash account. What should be your "sales per year for overhauling to be the preferred alternative?

User Account

All Pages