You want to invest in a riskless project in Sweden. The project has an initial cost of SKr3.7 million and is expected to produce cash inflows of SKr1.6 million a year for three years. The project will be worthless after three years. The expected inflation rate in Sweden is 3.6 % while it is 4.8 % in the U.S. A risk-free security is paying 6.5 % in the U.S. The current spot rate is $1 = SKr6.9864. What is the net present value of this project in Swedish krona using the foreign currency approach? Assume the international Fisher effect applies.

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The Answer of You want to invest in a riskless project in Sweden. The project has an initial cost of SKr3.7 million and is expected to produce cash inflows of SKr1.6 million a year for three years. The project will be worthless after three years. The expected inflation rate in Sweden is 3.6 % while it is 4.8 % in the U.S. A risk-free security is paying 6.5 % in the U.S. The current spot rate is $1 = SKr6.9864. What is the net present value of this project in Swedish krona using the foreign currency approach? Assume the international Fisher effect applies.

You Want to Invest in a Riskless Project in Sweden