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Ch. 31. International Capital Budgeting Using the Foreign Currency Approach. ABC Company is considering a capital project with the cash flows as stated below in Euros. The project is in Euros and must be converted back to USD. The exchange rate is 0.83 Euros. The difference in the nominal rates between the two currencies is 2 percent. The appropriate discount rate for the project is estimated to be 10%, the US cost of capital for the company. What is the NPV of the project in US Dollars?  NPV Year Cash Flows in Euro Year 0        € -2,900,000 Year 1 €1,300,000 Year 2 €1,300,000 Year 3 €1,300,000 Round to the nearest cent and format as "XXX,XXX.XX"

Ch. 31. International Capital Budgeting Using the Foreign Currency Approach. ABC Company is considering a capital project with the cash flows as stated below in Euros. The project is in Euros and must be converted back to USD. The exchange rate is 0.83 Euros. The difference in the nominal rates between the two currencies is 2 percent. The appropriate discount rate for the project is estimated to be 10%, the US cost of capital for the company. What is the NPV of the project in US Dollars?  NPV Year Cash Flows in Euro Year 0        € -2,900,000 Year 1 €1,300,000 Year 2 €1,300,000 Year 3 €1,300,000 Round to the nearest cent and format as "XXX,XXX.XX"

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Ch. 31. International Capital Budgeting Using the Foreign Currency Approach. ABC Company is considering a capital project with the cash flows as stated below in Euros. The project is in Euros and must be converted back to USD. The exchange rate is 0.83 Euros. The difference in the nominal rates between the two currencies is 2 percent.

The appropriate discount rate for the project is estimated to be 10%, the US cost of capital for the company. What is the NPV of the project in US Dollars? 

NPV

Year

Cash Flows in Euro

Year 0

       € -2,900,000

Year 1

€1,300,000

Year 2

€1,300,000

Year 3

€1,300,000

Round to the nearest cent and format as "XXX,XXX.XX"

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