What is the break-even salvage value

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A multinational company is considering establishing a two-year project in Canada with a $30 million initial investment. The firm’s cost of capital is .12. The required rate of return on this project is 0.14. The project is expected to generate cash flows of CA$11,200,000 in Year 1 and CA$30,300,000 in Year 2, excluding the salvage value. Assume no taxes, and a stable exchange rate of $0.58 per CA$ over the next two years. All cash flows are remitted to the parent. What is the break-even salvage value?

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Reference no: EM132005673

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