Question

Surfboards USA wants to expand its operations to Australia. The current indirect exchange rate is 1.45 for U.S. and Australian dollars. The anticipated inflation rate is 3% in the United States, but only 1.5% in Australia. The discount rate in the United States for the expansion project is 14%. If the following Australian dollars have been forecasted for the expansion project, should Surfboards USA expand to Australia? Use the domestic currency approach.
Investment: A$ 40,000,000
Cash Flows: Year 1 – A$ 5,000,000
Year 2 – A$ 9,000,000
Year 3 – A$ 16,000,000
Year 4 – A$ 20,000,000
Year 5 – A$ 8,000,000
Year 6 – A$ 3,000,000



$1.99
Sales0
Views77
Comments0
  • CreatedMay 08, 2014
  • Files Included
Post your question
5000