Please correct answer and don't use hand rating Carpet Baggers Inc. is proposing to construct a new bagging plant in a country in Europe. The two prime candidates are Germanyand Switzerland. The forecasted cash flows from the proposed plants are as follows:CoC₁C₂C3С4C5СбIRR (%)Germany(millionsof euros)Switzerland-60+10+15+15+20+20+2015.0(millions ofSwiss francs)-120+20+30+30+35+35+3512.8The 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, areturn 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? Justify your answer.• Cite six (6) peer-reviewed articles not including your textbook.

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Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter27: Multinational Financial Management

Section: Chapter Questions

Problem 14P

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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 as follows: C0 C1 C2 C3 C4 C5 C6 IRR(%) Germany (millions of euros) –75 +25 +30 +30 +35 +35 +35 32.6 Switzerland (millions of Swiss francs) –131 +35 +45 +45 +46 +46 +46 23.3 The spot exchange rate for euros is $1.45/€, while the rate for Swiss francs is SFr1.65/$. The interest rate is 4% in the United States, 3% in Switzerland, and 5% 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. a. Calculate the NPV in dollars for the German plant. b. Calculate the NPV in dollars for the Swiss plant.
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 as follows: C0 C1 C2 C3 C4 C5 C6 IRR(%) Germany (millions of euros) –75 +25 +30 +30 +35 +35 +35 32.6 Switzerland (millions of Swiss francs) –131 +35 +45 +45 +46 +46 +46 23.3 The spot exchange rate for euros is $1.45/€, while the rate for Swiss francs is SFr1.65/$. The interest rate is 4% in the United States, 3% in Switzerland, and 5% 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. a. Calculate the NPV in dollars for the German plant. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. b. Calculate the NPV in dollars for the Swiss plant. (Do not round intermediate calculations. Enter your answer in millions rounded…
Vijay
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It is 2024 and 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 forecast cash flows from the proposed plants are as follows: CO C1 +11 C5 C6 C2 C3 C4 IRR(%) 8.2 Germany (millions of euros) Switzerland (millions of Swiss -79 +16 +16 +21 +21 +21 -139 +21 +31 +31 +36 +36 +36 9.1 francs) The spot exchange rate for euros is USD1.4 = EUR1, while the rate for Swiss francs is CHF1.6 = USD1. The interest rate is 10% in the United States, 3% in Switzerland, and 5% in the euro countries. The financial manager has suggested that if the cash flows were stated in dollars, a return in excess of 12% would be acceptable. a. What is the dollar NPV of the German project? b. What is the dollar NPV of the Swiss project? c. Should the company go ahead with the German project, the Swiss project, or neither? (For requirements a & b, do not round intermediate calculations. Enter your answer in millions rounded to…
I just need B. It is not 16.93.
arpet 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 as follows: 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? What is the NPV of the projects? If it must choose between them, which should it take? The table is attached to this question. Be comprehensive when Justifying your answer. Thank you.
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 as follows: The table is attached as Added Image. please be detailed in your explantions. Thank you 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? Justify your answer.
The US based company is investing in a 2-year project in Europe. The initial investment is €10,000. The expected cash inflow in the year one is €6,000 and in the year two is €8,000. The risk-free rate in US is 3% and Europe 2%. If the spot rate is $1.25/€ and the required rate of return of the project is 14%, calculate the NPV of the project in dollars. (A) The NPV of the project in dollars is $1,773.62. (B) The NPV of the project in dollars is $1,704.32. (C) The NPV of the project in dollars is $1,418.90. (D) The NPV of the project in dollars is $1,989.74.
A project in Japan will generate 130M Yen per year forever. Sunrise Corp. is a US firm that is considering investing in that project in Japan. The current risk-free rate in US is 7% and the risk-free rate in Japan is 5%. The approproate cost of capital for a US-based project of similar risk is 15.8%. What is the cost of capital if you are using the foreign currency approach? 17.8% 8.8% 20.8%
The South Korean multinational manufacturing firm, Nam Sung Industries, is debating whether to invest in a 2-year project in the United States. The project's expected dollar cash flows consist of an initial investment of $1 million with cash inflows of $700,000 in Year 1 and $600,000 in Year 2. The risk-adjusted cost of capital for this project is 12%. The current exchange rate is 1,055 won per U.S. dollar. Risk-free interest rates in the United States and S. Korea are: % U.S. S. Korea a. If this project were instead undertaken by a similar U.S.-based company with the same risk-adjusted cost of capital, what would be the net present value generated by this project? Do not round intermediate calculations. Round your answer to the nearest dollar. $ What would be the rate of return generated by this project? Do not round intermediate calculations. Round your answer to two decimal places. 1-Year 4.0% 3.0% Rate of return: 2-Year 5.25% 4.25% b. What is the expected forward exchange rate 1…
Lakonishok equipment has an investment opportunity in Europe. The project cost 14,750,000 in europe currency and is expected to produce cash flows of euro 3,350,000 in year 1, euro 4,350,000 in year 2, and euro 4,750,000 in year 3. The current spot exchange rate is $ .83 in euros and the current risk free rate in the united states is 3 percent, compared to that in euroland of 2.2 percent. The appropriate discount rate for the project is estimated to be 10 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 9,250,000 in euros. What is the NPV of the project in U.S dollars? Do not round intermediate calculations and enter your answers in dollars , not in million of dollars , rounded to 2 decimal places e.g. 1,234,567,.89.

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