Reference no: EM132042342
Lakonishok Equipment has an investment opportunity in Europe. The project costs €14,650,000 and is expected to produce cash flows of €3,250,000 in Year 1, €4,250,000 in Year 2, and €4,650,000 in Year 3. The current spot exchange rate is $.81/€ and the current risk-free rate in the United States is 2.8 percent, compared to that in euroland of 2 percent. The appropriate discount rate for the project is estimated to be 12 percent, 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 €9,150,000.
What is the NPV of the project in U.S. dollars? (Enter your answer in dollars, not in millions of dollars. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 1,234,567.89.)
Use the approximate form of uncovered interest parity.
NPV $
Annual interest on investments
: Suppose he could earn 6% annual interest on his investments. Which options should he take?
|
Develop proposed improvements to theory
: Develop proposed improvements to theory and practice in software management. Apply project management techniques to manage resources and issues in software.
|
Cash coverage of outstanding debt
: Should they be higher given the reduced cash coverage of outstanding debt?
|
What is gross debt service ratio
: Property taxes on the house are expected to be $1200 per year. What is her gross debt service ratio?
|
What is the npv of the project in us dollars
: In addition, the subsidiary can be sold at the end of three years for an estimated €9,150,000. What is the NPV of the project in U.S. dollars?
|
What is the average accounting rate of return
: Projected net income for the four years is $8,000, $20,000, $15,000, and $22,000. What is the average accounting rate of return (in percents)?
|
What is the initial cost of the project
: The profitability index is 1.59 and the discount rate is 10.4 percent. What is the initial cost of the project?
|
Describe the given obstacles in detail
: In discussion with Josh, Tonya foreshadows "some serious obstacles to overcome." Describe these obstacles in detail.
|
Define the four personality types and how they relate to you
: DISC is a personality assessment tool that focuses on behavioral characteristics that are grouped together into four personality styles.
|