A U.S.firm can invest DM10 million in its German subsidiary and receive a return of €4.3 million annually for 3 years.The spot rate is €1.6/$(U.S.), the U.S.rate of inflation is expected to be 4% annually, and the German rate is expected to be 3% annually.If the appropriate risk-adjusted cost of capital in Dollars is 14%, does the project appear to have a positive NPV?

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The Answer of A U.S.firm can invest DM10 million in its German subsidiary and receive a return of €4.3 million annually for 3 years.The spot rate is €1.6/$(U.S.), the U.S.rate of inflation is expected to be 4% annually, and the German rate is expected to be 3% annually.If the appropriate risk-adjusted cost of capital in Dollars is 14%, does the project appear to have a positive NPV?

A USfirm Can Invest DM10 Million in Its German Subsidiary and and Receive