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: Co C₁ C₂ C3 CA C5 Со 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 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. • Cite six (6) peer-reviewed articles not including your textbook.

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: Co C₁ C₂ C3 CA C5 Со 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 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. • Cite six (6) peer-reviewed articles not including your textbook.

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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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.
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