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withholding taxes). Calculate the net present valu of this project assuming the company hedged 50 of the cash flow to be remitted to the parent company?

withholding taxes). Calculate the net present valu of this project assuming the company hedged 50 of the cash flow to be remitted to the parent company?

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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M6
Facey Corp has an initial investment of $6M in Japan with a required rate of return of 10%. The company will be changed the withholding tax of 10% to remit funds. At the end of the project, the salvage is valued at 15,000,000 yen. The current spot rate is $0.46, and the forward rate is $0.45. Yen to be remitted to the parent company are 7,000,000, 6,000,000, 10,000,000 and 12,000,000 for years 1, 2, 3, and 4 respectively (before withholding taxes). Calculate the net present value of this project assuming the company hedged 50% of the cash flow to be remitted to the parent company?
Transcribed Image Text:Facey Corp has an initial investment of $6M in Japan with a required rate of return of 10%. The company will be changed the withholding tax of 10% to remit funds. At the end of the project, the salvage is valued at 15,000,000 yen. The current spot rate is $0.46, and the forward rate is $0.45. Yen to be remitted to the parent company are 7,000,000, 6,000,000, 10,000,000 and 12,000,000 for years 1, 2, 3, and 4 respectively (before withholding taxes). Calculate the net present value of this project assuming the company hedged 50% of the cash flow to be remitted to the parent company?
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