A UK company is evaluating a foreign direct investment project that has an estimated salvage value of $25 million in nominal terms (future value) at the end of five years. The current spot exchange rate is $1.23 per pound sterling and the US Dollar is expected to appreciate against sterling by 3% per year. The UK company uses a discount rate of 12% to evaluate foreign direct investment. What is closest to the sterling present value of the salvage value?

Answer rating: 100% (QA)

To calculate the sterling present value of the salvage value we need to consider the future value in ... View the full answer