Question: Assume that in the original Ityesi example in Table all sales actually occur in the United States and are projected to be $58.5 million

Assume that in the original Ityesi example in Table all sales actually occur in the United States and are projected to be $58.5 million

Assume that in the original Ityesi example in Table all sales actually occur in the United States and are projected to be $58.5 million per year for four years. The risk-free rate on dollars is 3% and the risk-free rate on pounds is 8%. Ityesi's WACC is 7.08%. The spot exchange rate is $1.38 per pound. The tax rate is 25% in both countries. Keeping other costs the same, calculate the NPV of the investment opportunity. Year 0 1 2 3 4 Forward Exchange Rate (S/) 1.3161 1.3368 1.3484 1.2653 1.1577 Calcualte the cash flows below: (Round to three decimal places. Forward exchange rates must be rounded to four decimal places.) Year Free cash flow (millons of pounds) Forward exchange rate Free cash flow (millons of dollars) Sales in the US (millons of dollars) Cash flow (millions of dollars) 0

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