Question: Assume that in the original Ityesi example in the Table, all sales actually occur in the United States and are projected to be $ 61.5

Assume that in the original Ityesi example in the Table, all sales actually occur in the United States and are projected to be $ 61.5 million per year for four years. Keeping other costs the same, calculate the NPV of the investment opportunity. Assume the WACC is 6.9 %. The forward exchange rates are given below.

Year	0	1	2	3	4
Forward Exchange Rate ($/pound)	1.71131.7113	1.69321.6932	1.52791.5279	1.38261.3826	1.5315

Assume that in the original Ityesi example in the Table, all sales

Data Table Expected Foreign Free Cash Flows from Ityesi's U.K. Project 0 1 2 3 4 TABLE 31.1 SPREADSHEET Year Incremental Earnings Forecast ( millions) 1 Sales 2 Cost of Goods Sold 3 Gross Profit 4 Operating Expenses 5 Depreciation 6 EBIT 7 Income tax at 40% 8 Unlevered Net Income Free Cash Flow 9 Plus: Depreciation 10 Less: Capital Expenditures 11 Less: Increases in NWC 12 Pound Free Cash Flow 37.500 37.500 37.500 (15.625) (15.625) (15.625) 21.875 21.875 21.875 (5.625) (5.625) (5.625) (3.750) (3.750) (3.750) 12.500 12.500 12.500 (5.000) (5.000) (5.000) 7.500 7.500 7.500 37.500 (15.625) 21.875 (5.625) (3.750) 12.500 (5.000) 7.500 (4.167) 1.667 12.500) 3.750 3.750 (15.000) 3.750 - 3.750 - (17.500) 11.250 11.250 11.250 11.250 Print Done

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