What is the net present value of project

Reference no: EM131923212

Question: Petrus Company has unique opportunity to invest in a two-year project in Australia. The project is expected to generate 1,450,000 Australian dollars (AS) in the first year and Australian dollars in the second. At the end of the second year the salvage value is expected to be 119,000 Australian dollars. Petrus would have to invest $1,890,000 in the project today. Petrus has determined that the cost of capital for similar projects is 15%.

(a) What is the net present value of s project if the spot rate of the Australian dollar for the two years is forecast to be the project be undertaken (you have to explain why or why not?

(b) What is the break-even salvage value US dollars? Note: Round your final answer for parts (a) and(b) to the nearest cent. Hint Review Lecture 19, Slides 21-25 and Lecture 20, Slides 13-18. Treat the second year in this problem in similar way to the fourth year in the example in Lecture 20 because it is the final year of the project.

Reference no: EM131923212

Questions Cloud

How you would apply the core knowledge in a group setting : Provide at least three examples of times or situations when you have demonstrated the core knowledge of group work in the ending phase.

Horizontal and vertical components of the bomb : A military helicopter on a training mission is flying horizontally at a speed of 60.0 m/s when it accidentally drops a bomb (fortunately, not armed)

Why is the short-run demand curve for labor downward sloping : Why is the short-run demand curve for labor downward sloping? What mix of inputs should be used to produce a given level of output?

Compute the interest paid during the fifth year : Consider an 8-year loan with annual payments at 10%. If the loan amount is $250,000, compute the interest paid during the fifth year

What is the net present value of project : etrus Company has unique opportunity to invest in a two-year project in Australia. The project is expected to generate 1,450,000 Australian dollars (AS).

How is the psbr related to the budget deficit : The UK tax system discriminates heavily against earned income but leaves wealth relatively untouched. How is the PSBR related to the Budget deficit?

Provide your assessment of one current management : Provide your assessment of one current management development strategy and how you would apply it in an organization.

Calculate the log mean difference and effectiveness : what length of heat exchanger is required to achieve a hot-side outlet temperature of 60 degree F if the overall heat transfer coefficient

Find the strength of the magnetic field in-side the solenoid : Find the strength of the magnetic field in-side the solenoid. Answer in units of T. Find the current in the solenoid if it has 27.2 turns/cm. Answer in units of

User Account

All Pages