Question: Kalamazoo Marine wants to expand its operations to New Zealand

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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