Estimate chf cash flows, A project in Hong Kong costs Hong

Estimate chf cash flows

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Reference no: EM131164245

A project in Hong Kong costs Hong Kong dollar (HKD) 200,000 and produces cash flows of HKD 75,000 per year for five years. Gruner, a Swiss firm using the Swiss franc (CHF), is interested in adopting this project. If this had been a domestic project, the discount rate would have been 11 percent. Forecasts of inflation rates over the next five years indicate inflation of 1.2 percent in Switzerland and 4 percent in Hong Kong. Spot CHFHKD is 8.0.

Making appropriate assumptions and using data given in the problem, estimate CHF cash flows, and calculate the project NPV in CHF.

Reference no: EM131164245

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