Suppose a U.S. multinational firm estimates that a $150 million capital expenditure in a new plant in

Question:

Suppose a U.S. multinational firm estimates that a $150 million capital expenditure in a new plant in an unstable developing country will have a life of two years before it is confiscated by the foreign government. During this two-year period, the operating cash flows will be $100 million each year. In addition, the firm will be able to use the new facility to repatriate $10 million each year in funds that have been held in the country involuntarily. If the for the operations cash flows is 10 percent and the for the exchange control avoidance is 8 percent, what is the adjusted present value of the project? Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...