Dryden Co. is a U.S. firm that plans a foreign project in which it needs $8,000,000 as

Question:

Dryden Co. is a U.S. firm that plans a foreign project in which it needs $8,000,000 as an initial investment. The project is expected to generate cash flows of 10 million euros in one year, after the complete repayment of the loan (including the loan interest and principal). The project has zero and is terminated at the end of one year. Dryden considers financing this project with:
• All U.S. equity,
• All U.S. debt (loans) denominated in dollars provided by U.S. banks,
• All debt (loans) denominated in euros provided by European banks, or
• Half of funds obtained from loans denominated in euros, and half obtained from loans denominated in dollars.
Which form of financing will cause the project's NPV to be the least sensitive to risk?
Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...