An Australian company plans to initiate a project in France. The project will last 2 years and shut down afterwards. The initial investment for the project is €3,750,000. Expected cash flows from the project over the next two years are €2,950,000 and €1,850,000 respectively.
The expected spot exchange rate at the time of initial investment is A$1.40/€, while that over the next two years are A$1.36/€ and A$1.37/€ respectively.
Required:1) If the company uses a discount rate of 10 percent, what is the NPV of this project expressed in A$ (rounded to nearest value)?

Answer rating: 100% (QA)

To calculate the NPV of the project in A we need to convert all cash flows from to A using ... View the full answer