What is break-even salvage value

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Reference no: EM131553407

An MNC is considering establishing a two-year project in New Zealand with a $30 million initial investment. The firm’s cost of capital is .12%. The required rate of return on this project is 18%. The project is expected to generate cash flows of NZ$12M in Year 1 and NZ$30M in Year 2, excluding the salvage value. Assume no taxes, and a stable exchange rate of $0.60 per NZ$ over the next two years. All cash flows are remitted to the parent. What is the break-even salvage value?

Reference no: EM131553407

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