Moon Rhee Auto Supply, a Korean supplier of parts to Kia Motors, is evaluating an opportunity to
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Moon Rhee Auto Supply, a Korean supplier of parts to Kia Motors, is evaluating an opportunity to set up a plant in Alabama, where Kia Motors has an auto assembly plant for its SUVs. The cost of this plant will be $13.5 million. The current spot rate is 1,120.318 Korean won per U.S. dollar. The firm is expected to use this plant for the next five years and is expecting to generate the following cash flows:
The firm uses a discount rate of 9 percent for projects like this in the United States. What is the NPV of this project? Should Moon Rhee Auto Supply take on thisproject?
Discount RateDepending 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...
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Fundamentals of corporate finance
ISBN: 978-0470876442
2nd Edition
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates
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