An American firm is considering an investment in Australia with expected cash flows of AUD 1 0
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Question:
An American firm is considering an investment in Australia with expected cash flows of AUD million in the first year, AUD million in the second year, and AUD million in the third year. The initial cost of the project is AUD million. Suppose that the inflation rate in Australia is and the inflation rate in the US is Suppose the borrowing rate in $ i$ Let the spot rate S$AUD $AUD Assume that all the parity conditions hold International Fisher Parity and PPP Further assume that the US firm evaluates the cash flow in each period in dollars. The NPV of the project in millions of USD is equal to: give numerical answer without $ sign
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