What is expected value of the NPV of this project

Assignment Help Financial Management
Reference no: EM132053214

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 0.22 that the MXP will depreciate to 0.1 USD/MXP. * You also think that with probability of 0.22 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: EM132053214

Questions Cloud

Difference between vertical and horizontal mergers : What is the difference between Vertical and Horizontal Mergers? What are synergies in a merger?
Financial flexibility is one of the main issues affecting : When questioned, managers argue that “Financial Flexibility” is one of the main issues affecting their choices about capital structure.
What is the amount of total liabilities and equity : What is the amount of total liabilities and equity that appears on the firm's balance sheet?
Assume the average market return : Assume the average market return over the next 50 years is expected to be 9.5%. what percentage of his final wealth has he sacrificed in fees?
What is expected value of the NPV of this project : Your required return on the project is 18%. What is the expected value of the NPV of this project, as measured in USD?
Considering project that promises you cash flows : You are considering a project that promises you cash flows of 528 USD each year for 9 years.
The new JPY-USD exchange rate at the end of the year : The current exchange rate is 99 JPY/USD. If the purchasing power parity holds, what should be the new JPY/USD exchange rate at the end of the year?
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?
What will be your profit from implementing strategy : Assume you have 1 million USD to conduct one cycle of triangular arbitrage. What will be your profit from implementing this strategy?

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd