Question

Kalamazoo Marine wants to expand its operations to New Zealand. The current indirect exchange rate is 1.75 for U.S. and New Zealand dollars. The anticipated inflation rate is 3.8% in the United States, but only 1.75% in New Zealand. The discount rate in the United States for the expansion project is 16%. If the following after-tax cash flows have been forecasted for the expansion project in NZ$, should Surfboards USA expand to New Zealand:
Investment: NZ$ 60,000,000
Cash Flows: . Year 1 – NZ$7,000,000
Year 2 – NZ$10,000,000
Year 3 – NZ$ 25,000,000
Year 4 – NZ$ 19,000,000
Year 5 – NZ$ 17,000,000
Year 6 – NZ$ 5,000,000



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  • CreatedMay 08, 2014
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