Salvage is zero and no working capital requirement exists

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Reference no: EM131010938

Romig Enterprises, a U. S.- based firm, is considering a project in China to produce and sell compressors. It is a four- year project with an initial investment of USD 500,000. Each year, it would produce 800 units of the product at a direct cost of CNY 600 and sales price of CNY 2,000. Indirect expenses, not including depreciation, are expected to be CNY 120,000. Depreciation is straight line to zero. Taxes are 30 percent. Calculate the NPV in USD assuming a USD discount rate of 10 percent. The current spot rate is USDCNY = 6.50. Assume that currency values do not change during the life of the project, salvage is zero, and no working capital requirement exists.

Reference no: EM131010938

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