Collapse O WORDS POWERED BY TINY QUESTION 4 20 points Save Answer You are considering a project in Switzerland. The project has an initial cost in Swiss francs (Sfr) of Sfr5,000,000 and expected cash flows of Sfr3,000,000 in year 1, Sfr4,000,000 in year 2, Sfr2,000,000 in year 3, and Sfr3,500,000 in year 4. There is a 10% chance that the Swiss government will expropriate your assets. If your assets are expropriated in a particular year, then you will not receive that year's or any later year's cash flow from your investment. The discount rate for similar projects in the United States is 25%. The discount rate for similar projects in the Switzerland is 30%. Assume the parity conditions do not hold. The current spot rate is 1.0725 S/Sfr. The dollar is expected to appreciate by 5% each year for the next four years. What is the NPV of expropriation risk from the project perspective? Show all necessary calculations to support your answer. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). B I U S Paragraph Arial TX In Q 55 14px xX2 > TT T O WORDS P 20 QUESTION 5 Creperu is a Spanish company. The Spanish risk-free rate is 4 percent. The risk premium in the Spanish stock market is 7 percent. Creperu's beta is 2.5 when measured against the MacBook Air 57 80 FO Collapse O WORDS POWERED BY TINY QUESTION 4 20 points Save Answer You are considering a project in Switzerland. The project has an initial cost in Swiss francs (Sfr) of Sfr5,000,000 and expected cash flows of Sfr3,000,000 in year 1, Sfr4,000,000 in year 2, Sfr2,000,000 in year 3, and Sfr3,500,000 in year 4. There is a 10% chance that the Swiss government will expropriate your assets. If your assets are expropriated in a particular year, then you will not receive that year's or any later year's cash flow from your investment. The discount rate for similar projects in the United States is 25%. The discount rate for similar projects in the Switzerland is 30%. Assume the parity conditions do not hold. The current spot rate is 1.0725 S/Sfr. The dollar is expected to appreciate by 5% each year for the next four years. What is the NPV of expropriation risk from the project perspective? Show all necessary calculations to support your answer. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). B I U S Paragraph Arial TX In Q 55 14px xX2 > TT T O WORDS P 20 QUESTION 5 Creperu is a Spanish company. The Spanish risk-free rate is 4 percent. The risk premium in the Spanish stock market is 7 percent. Creperu's beta is 2.5 when measured against the MacBook Air 57 80 FO