W. ws (5) D ws (5) 0 Year 0 (Today) 0 15,000 0 1.50 0 20,000 0 1.00 * Year 1 8000 1000 500 1.46 12,000 1500 500 0.96 Year 2 8000 1000 500 1.45 12.000 1500 500 0.94 Year 3 8000 1000 500 1.44 12.000 1500 500 0.92
W. ws (5) D ws (5) 0 Year 0 (Today) 0 15,000 0 1.50 0 20,000 0 1.00 * Year 1 8000 1000 500 1.46 12,000 1500 500 0.96 Year 2 8000 1000 500 1.45 12.000 1500 500 0.94 Year 3 8000 1000 500 1.44 12.000 1500 500 0.92
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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![swered
Answer
Jensen Aquatics Inc., which manufactures and sells scuba gear worldwide, is considering an investment in either Europe or Great Britain.
Consider the following cash flows for each project, assume a 12% wacc, and consider these to be average risk projects for the firm. Answer
the questions that follow.
Britain
Total cash inflows (E)
Total cash outflows (6)
Additional dollar cash inflows (5)
Forecast exchange rate (S/E)
Europe
Total cash inflows (€)
Total cash outflows (0)
Additional dollar cash inflows (5)
Forecast exchange rate (S/E)
euro 4,945
$4,945
$6,420
Year 0 (Today)
euro 6,420
0
15,000
0
1.50
0
20,000
0
1.00
Refer to Table 16.1. The NPV for the European investment is estimated at
Year 1
8000
1000
500
1.46
12,000
1500
500
0.96
Year 2
8000
1000
500
1.45
12.000
1500
500
0.94
Year 3
8000
1000
500
1.44
12.000
1500
500
0.92](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcbbc2f57-c3ec-4664-8bfe-633461c759d5%2Fe468c627-43c0-49e5-a54c-14b6a8c198fa%2Fwcu3zgb_processed.jpeg&w=3840&q=75)
Transcribed Image Text:swered
Answer
Jensen Aquatics Inc., which manufactures and sells scuba gear worldwide, is considering an investment in either Europe or Great Britain.
Consider the following cash flows for each project, assume a 12% wacc, and consider these to be average risk projects for the firm. Answer
the questions that follow.
Britain
Total cash inflows (E)
Total cash outflows (6)
Additional dollar cash inflows (5)
Forecast exchange rate (S/E)
Europe
Total cash inflows (€)
Total cash outflows (0)
Additional dollar cash inflows (5)
Forecast exchange rate (S/E)
euro 4,945
$4,945
$6,420
Year 0 (Today)
euro 6,420
0
15,000
0
1.50
0
20,000
0
1.00
Refer to Table 16.1. The NPV for the European investment is estimated at
Year 1
8000
1000
500
1.46
12,000
1500
500
0.96
Year 2
8000
1000
500
1.45
12.000
1500
500
0.94
Year 3
8000
1000
500
1.44
12.000
1500
500
0.92
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