What is the npv of the project to the subsidiary

Assignment Help Financial Management

Reference no: EM132061260

Mylox, a U. S.- based pharmaceutical firm, is proposing a project in a developing country. The project’s after- tax cash flows in the foreign currency are as follows:

Year After- Tax Cash Flows

1 200

2 250

3 300

4 250

5 200

The initial investment in the project is USD 300. The spot rate for the foreign currency is USD 0.86. The appropriate discount rate for foreign currency cash flows is 13 percent.

Assume that the foreign government forces the firm to place all cash flows in a bank account earning 3 percent until the end of the project. What is the NPV of the project to the subsidiary?

Reference no: EM132061260

Questions Cloud

What is the remaining balance on mortgage after five year : If you put 30 percent down on a home costing $150,000 with a 25-year, 9% loan, what is the remaining balance on the mortgage after five years?

What factors do you think determined the movements : Analyze Apple's revenue growth, cost increase, and net income growth. What factors do you think determined the movements.

Interest-only mortgage and adjustable-rate mortgage : Discuss the difference between roll-over mortgage, interest-only mortgage, adjustable-rate mortgage,

What is the firm wacc if the debt-equity ratio : The Riddler's Lair has a cost of equity of 13.8% pre-tex cost of debt of 6.7% and tax rate of 34%.what is the firm's WACC if the debt-equity ratio is 0.40?

What is the npv of the project to the subsidiary : The initial investment in the project is USD 300. What is the NPV of the project to the subsidiary?

Difference between callable-puttable-convertible bonds : Discuss the difference between callable/puttable/convertible bonds. Compare it with the normal bond?

What is the market estimate of the annual inflation rate : What is the market’s estimate of the annual inflation rate over the next three years?

Estimate domestic currency cash flows and npv to parent : Assuming that parity conditions hold, estimate domestic currency cash flows and NPV to the parent under the blocked scenario.

What is the npv from the subsidiary perspective : The subsidiary- level cost of capital for this project is 18 percent. What is the NPV from the subsidiary’s perspective?

User Account

All Pages