Hilton International is considering investing in a new Swiss hotel The required initial investment is $1 5 million (or SFr 2 38 million at the current exchange rate of $0 63 SFr 1) Profits for the first 10 years will be reinvested, at which time Hilton will sell out to its partner Based on projecte...

a Hilton should focus on the real dollar value of future cash flows or 3880000e 10 1k1i us 10 where e 10 is the nominal dollar value of the Swiss fran ...

Hilton International is considering investing in a new Swiss hotel. The required initial investment is $1.5 million

Question:

Hilton International is considering investing in a new Swiss hotel. The required initial investment is $1.5 million (or SFr 2.38 million at the current of $0.63 = SFr 1). Profits for the first 10 years will be reinvested, at which time Hilton will sell out to its partner. Based on projected earnings, Hilton's share of this hotel will be worth SFr 3.88 million in 10 years.
a. What factors are relevant in evaluating this investment?
b. How will fluctuations in the value of the Swiss franc affect this investment?
c. How would you forecast the $:SFr 10 years ahead?

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...