Question: Carpet Baggers, Incorporated, is proposing to construct a new bagging plant in a country in Europe. The two prime candidates are Germany and Switzerland. The

Carpet Baggers, Incorporated, is proposing to construct a new bagging plant

Candidates	C₀	C₁	C₂	C₃	C₄	C₅	C₆	IRR(%)
Germany (millions of euros)	75	+25	+30	+30	+35	+35	+35	32.6
Switzerland (millions of Swiss francs)	131	+35	+45	+45	+46	+46	+46	23.3

The spot exchange rate for euros is EUR/USD = 1.45, while the rate for Swiss francs is USD/CHF = 1.65. The interest rate is 4% in the United States, 3% in Switzerland, and 5% in the euro countries. The financial manager has suggested that, if the cash flows were stated in dollars, a return in excess of 10% would be acceptable.

Calculate the NPV in dollars for the German plant.

Note: Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.

Calculate the NPV in dollars for the Swiss plant.

Note: Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.

Should the company go ahead with either project?

If it must choose between them, which should it take?

Carpet Baggers, Incorporated, is proposing to construct a new bagging plant in a country in Europe. The two prime candidates are Germany and Switzerland. The forecasted cash flows from the proposed plants are as follows: The spot exchange rate for euros is EUR/USD =1.45, while the rate for Swiss francs is USD/CHF =1.65. The interest rate is 4% in the United States, 3\% in Switzerland, and 5% in the euro countries. The financial manager has suggested that, if the cash flows were stated in dollars, a return in excess of 10% would be acceptable. a. Calculate the NPV in dollars for the German plant. Note: Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. b. Calculate the NPV in dollars for the Swiss plant. Note: Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. c. Should the company go ahead with either project? d. If it must choose between them, which should it take

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