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C, CA C C. IRR (%) Germany (millions of euros) -60 +10 +15 +15 +20 +20 +20 15.0 Switzerland (millions of Swiss francs) -120 +20 +30 +30 +35 +35 +35 12.8

C, CA C C. IRR (%) Germany (millions of euros) -60 +10 +15 +15 +20 +20 +20 15.0 Switzerland (millions of Swiss francs) -120 +20 +30 +30 +35 +35 +35 12.8

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Investment decisions Carpet Baggers Inc. is proposing to construct a new bagging plant in a country in Europe. The two prime candidates are Germany and Switzerland. The forecasted cash flows from the proposed plants are attached

The spot exchange rate for euros is $1.3/€, while the rate for Swiss francs is CHF 1.5/$. The interest rate is 5% in the United States, 4% in Switzerland, and 6% in the euro countries. The financial manager has suggested that, if the cash flows were stated in dollars, a return in excess of 10% would be acceptable. Should the company go ahead with either project? If it must choose between them, which should it take?

C2 IRR (%) Germany (millions of euros) -60 +10 +15 +15 +20 +20 +20 15.0 Switzerland (millions of Swiss francs) -120 +20 +30 +30 +35 +35 +35 12.8
Transcribed Image Text:C2 IRR (%) Germany (millions of euros) -60 +10 +15 +15 +20 +20 +20 15.0 Switzerland (millions of Swiss francs) -120 +20 +30 +30 +35 +35 +35 12.8
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