Waiting for answer This question has not been answered yet. You can hire a professional tutor to get the answer.

QUESTION

I need this ASAP within the hour! A US firm is evaluating a 3-year capital budgeting project in Japan. The initial cost of the project is 100 million...

I need this ASAP within the hour!!!! 1. A US firm is evaluating a 3-year capital budgeting project in Japan. The initial cost of the project is 100 million yen. The project is expected togenerate 50 million yen per year over the next 3 years. The exchange rate is $1 = 95 yen and it is expected to be constant over time. The firm conducts country risk assessment and finds two scenarios as follows.Scenario 1: 70% chance that the Japanese government imposes 20% tax on annual cash flows generated by the project.Scenario 2: 30% chance that the Japanese government imposes 10% tax on annual cash flows generated by the project.The firm estimates a discount rate of 10% for the project. Find the expected NPV of the project.Answer ____________________2. A US firm has a European branch in Germany and analyzes its cash flows in euro. Use the following exchange rate information to find the standard deviation of the euro movement.1 euro = $1.161 euro = $1.211 euro = $1.191 euro = $1.24 (Today’s spot rate) The annual US interest rate is 3% and the annual euro interest rate is 5%. Assuming that the IRP holds and the firm uses the forward rate to forecast the next year’s exchange rate, find the maximum 1-year percentage loss of the euro using the value-at-risk method and a 99% probability. Use the following normal distribution. z = -1.65 => Probability = .05z= -1.96 => Probability = .025z= -2.33 => Probability = .01Answer_______________________3.A US Co will need to pay 6 million euros to Bagano Co in 3 years and use the forward contract to hedge against the exchange rate risk. The annual US interest rate is 4.5% and the annual euro interest rate is 2%. If the IRP holds, what is the amount of US dollars the US Co will need to make the payment in 3 years? Assume that the spot rate of the euro is $1.22.Answer__________________

1. A US firm is evaluating a 3­year capital budgeting project in Japan. The initial cost of the project is 100 million yen. The project is expected togenerate 50 million yen per year over the next...
Show more
LEARN MORE EFFECTIVELY AND GET BETTER GRADES!
Ask a Question