You have an investment opportunity in Japan. It requires an investment of $1 million today and will
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You have an investment opportunity in Japan. It requires an investment of $1 million today and will produce a cash flow of ¥114 million in one year with no risk. Suppose the risk-free interest rate in the United States is 4%, the risk-free interest rate in Japan is 2%, and the current competitive exchange rate is ¥110 per $1. What is the NPV of this investment? Is it a good opportunity?
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