What is the irr of the project in t-marks

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Question: A U.S. company is considering a high technology project in a foreign country. The estimated economic results for the project (after taxes), in the foreign currency (T-marks), is shown in the following table for the seven-year analysis period being used. The company requires an 18% rate of return in U.S. dollars (after taxes) on any investments in this foreign country.

2311_T-marks.png

a. Should the project be approved, based on a PW analysis in U.S. dollars, if the devaluation of the T-mark, relative to the U.S. dollar, is estimated to average 12% per year and the present exchange rate is 20 T-marks per dollar?

b. What is the IRR of the project in T-marks?

c. Based on your answer to (b), what is the IRR in U.S. dollars?

Reference no: EM131506683

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