Question 1

What is the euro-denominated IRR of this project?

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Question 2

What is the euro-denominated IRR?

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Question 3

Find the euro-zone cost of capital to compute the dollar-denominated NPV of this project.

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Question 4

A French firm is considering a one-year investment in the United Kingdom with a pound-denominated rate of return of iS1U1B1£S1U1B0 = 15%. The firm's local cost of capital is iS1U1B1€S1U1B0 = 10% The project costs £1,000 and will return £1,150 at the end of one year. The current exchange rate is €2.00 = £1.00 Suppose that the bank of England is considering either tightening or loosening its monetary policy. It is widely believed that in one year there are only two possibilities: $$\begin{array} { l } S _ { 1 } ( € \mid £ ) = € 2.20 \text { per } £ \ S _ { 1 } ( € \mid £ ) = € 1.80 \text { per } £ \end{array}$$ Following revaluation, the exchange rate is expected to remain steady for at least another year. -Find the ex post IRR in euro for the French firm if they undertake the project today and then the exchange rate falls to S₁(€|£)= €1.80 per £.

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Question 5

What is the dollar-denominated IRR of this project?

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Question 6

Consider the following international investment opportunity:  The current exchange rate is $1.60 = €1.00. The inflation rate in the U.S. is 3 percent and in the euro zone 2 percent. The appropriate cost of capital to a U.S.-based firm for a domestic project of this risk is 8 percent.
-What is the euro-denominated IRR of this project?

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Question 7

Find the dollar cash flows to compute the dollar-denominated NPV of this project.
Please note that your answer is worth ZERO POINTS if it does not contain currency symbols.

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Question 8

Consider the following international investment opportunity:  The current exchange rate is $1.60 = €1.00. The inflation rate in the U.S. is 3 percent and in the euro zone 2 percent. The appropriate cost of capital to a U.S.-based firm for a domestic project of this risk is 8 percent.
-What is the dollar-denominated IRR of this project?

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Question 9

What is the dollar-denominated IRR?

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Question 10

Consider the following international investment opportunity:  The current exchange rate is $1.60 = €1.00. The inflation rate in the U.S. is 3 percent and in the euro zone 2 percent. The appropriate cost of capital to a U.S.-based firm for a domestic project of this risk is 8 percent.
-Find the euro-zone cost of capital to compute the dollar-denominated NPV of this project.

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Question 11

Find the break-even price (in dollars)and break-even quantity for the U.S.project.

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Question 12

Consider the following international investment opportunity:  The current exchange rate is $1.60 = €1.00. The inflation rate in the U.S. is 3 percent and in the euro zone 2 percent. The appropriate cost of capital to a U.S.-based firm for a domestic project of this risk is 8 percent.
-Find the dollar cash flows to compute the dollar-denominated NPV of this project.

Accepted Answer

The answer of Consider the following international investment opportunity: ...

Question 13

Repeat the above project analysis assuming that the Irish firm could replicate the project in Ireland.(i.e.cash flow out the project in Ireland and find break-even price (in €),quantity,NPV,IRR (in euro not dollars).

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Question 14

What is the dollar-denominated IRR of this project?

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Question 15

Find the euro-zone cost of capital to compute the dollar-denominated NPV of this project.

Accepted Answer

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Question 16

A French firm is considering a one-year investment in the United Kingdom with a pound-denominated rate of return of iS1U1B1£S1U1B0 = 15%. The firm's local cost of capital is iS1U1B1€S1U1B0 = 10% The project costs £1,000 and will return £1,150 at the end of one year. The current exchange rate is €2.00 = £1.00 Suppose that the bank of England is considering either tightening or loosening its monetary policy. It is widely believed that in one year there are only two possibilities: $$\begin{array} { l } S _ { 1 } ( € \mid £ ) = € 2.20 \text { per } £ \ S _ { 1 } ( € \mid £ ) = € 1.80 \text { per } £ \end{array}$$ Following revaluation, the exchange rate is expected to remain steady for at least another year. -Find the ex post IRR in euro for the French firm if they undertake the project today and then the exchange rate rises to S₁(€|£)= €2.20 per £.

Accepted Answer

The answer of A French firm is considering a one-year...

Question 17

Find the dollar cash flows to compute the dollar-denominated NPV of this project.
Your answer is worth ZERO POINTS if it does not contain currency symbols such as $,£,€,¥!

Accepted Answer

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Question 18

A French firm is considering a one-year investment in the United Kingdom with a pound-denominated rate of return of iS1U1B1£S1U1B0 = 15%. The firm's local cost of capital is iS1U1B1€S1U1B0 = 10% The project costs £1,000 and will return £1,150 at the end of one year. The current exchange rate is €2.00 = £1.00 Suppose that the bank of England is considering either tightening or loosening its monetary policy. It is widely believed that in one year there are only two possibilities: $$\begin{array} { l } S _ { 1 } ( € \mid £ ) = € 2.20 \text { per } £ \ S _ { 1 } ( € \mid £ ) = € 1.80 \text { per } £ \end{array}$$ Following revaluation, the exchange rate is expected to remain steady for at least another year. -Find the IRR in euro for the French firm if they wait one year to undertake the project after the exchange rate rises to S₁(€|£)= €2.20 per £.

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Question 19

Consider the following international investment opportunity:  The current exchange rate is $1.60 = €1.00. The inflation rate in the U.S. is 3 percent and in the euro zone 2 percent. The appropriate cost of capital to a U.S.-based firm for a domestic project of this risk is 8 percent.
-What is the euro-denominated IRR of this project?

Accepted Answer

The answer of Consider the following international investment opportunity: ...

Question 20

What is the NPV of the U.S.-based project to the Irish firm?

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Quiz 18: International Capital Budgeting

What is the euro-denominated IRR of this project?

What is the euro-denominated IRR?

Find the euro-zone cost of capital to compute the dollar-denominated NPV of this project.

What is the dollar-denominated IRR of this project?

Find the dollar cash flows to compute the dollar-denominated NPV of this project. Please note that your answer is worth ZERO POINTS if it does not contain currency symbols.

What is the dollar-denominated IRR?

Find the break-even price (in dollars)and break-even quantity for the U.S.project.

Repeat the above project analysis assuming that the Irish firm could replicate the project in Ireland.(i.e.cash flow out the project in Ireland and find break-even price (in €),quantity,NPV,IRR (in euro not dollars).

What is the dollar-denominated IRR of this project?

Find the euro-zone cost of capital to compute the dollar-denominated NPV of this project.

Find the dollar cash flows to compute the dollar-denominated NPV of this project. Your answer is worth ZERO POINTS if it does not contain currency symbols such as $,£,€,¥!

What is the NPV of the U.S.-based project to the Irish firm?