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A US multinational is contemplating a production facility in the UK. The production will be sold locally in the UK. The cost of the facility is...
A US multinational is contemplating a production facility in the UK. The production will be sold locally in the UK. The cost of the facility is estimated at $150,000,000 USD. Here is other pertinent information on the project:Year1234Price per unit GBP1,5001,5501,6001,800Unit sales50,000180,000360,000500,000Variable costs/Unit GBP1,0001,2001,3001,500Fixed expenses GBP150,000,00075,000,00087,000,00095,000,000Noncash expenses GBP50,000,00050,000,00050,000,00050,000,000British tax rate35%35%40%40%Withholding tax rate10%10%10%10%Profit remittance %10%50%75%100%Exchange rate $/GBP1.351.451.751.35The required rate of return in 12%. Examine this project form the parent’s perspective
