Question: Surfboards USA wants to expand its operations to Australia The

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




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  • CreatedMay 08, 2014
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