What is the npv of the project

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Lakonishok Equipment has an investment opportunity in Europe. The project costs €18,815,191 and is expected to produce cash flows of €3,205,836 in Year 1, €4,092,862 in Year 2, and €6,015,287 in Year 3. The current spot exchange rate is $1.35/€ and the current risk-free rate in the United States is 3.6%, compared to that in Europe of 2.94%. The appropriate discount rate for the project is estimated to be 10.96%, the U.S. cost of capital for the company. In addition, the subsidiary can be sold at the end of three years for an estimated €12,893,741. What is the NPV of the project?

Reference no: EM133056311

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