Question: Delta Company, a U.S. MNC, is contemplating making a foreign capital expenditure in South Africa. The initial cost of the project is ZAR11,600. The annual

Delta Company, a U.S. MNC, is contemplating making a foreign capital expenditure in South Africa. The initial cost of the project is ZAR11,600. The annual cash flows over the five-year economic life of the project in ZAR are estimated to be 3,480, 4,480, 5,470, 6,460, and 7,400. The parent firms cost of capital in dollars is 9.5 percent. Long-run inflation is forecasted to be 3 percent per annum in the United States and 7 percent in South Africa. The current

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