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What is the net present value of this project

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Question - You want to invest in a project in Canada. The project has an initial cost of C$1.6 million and is expected to produce cash inflows of C$750,000 a year for 3 years. The project will be worthless after the first 3 years. The expected inflation rate in Canada is 5 percent while it is only 3.5 percent in the U.S. The applicable interest rate for the project in Canada is 12 percent. The current spot rate is C$1=$0.8637. What is the net present value of this project in Canadian dollars using the foreign currency approach?

Reference no: EM132840850

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