Problem 21-15 Capital Budgeting [LO2] You are evaluating a proposed expansion of an existing subsidiary locate Switzerland. The cost of the expansion would be SF 18 million. The cash flows from project would be SF 4.6 million per year for the next five years. The dollar requ return is 12 percent per year, and the current exchange rate is SF 1.11. The going rat Eurodollars is 6 percent per year. It is 3 percent per year on Euroswiss. Use approximate form of interest rate parity in calculating the expected spot rates. Convert the projected franc flows into dollar flows and calculate the NPV. (Do round intermediate calculations and enter your answer in dollars, not in milli rounded to two decimal places, e.g., 1,234,567.89) b-1. What is the required return on franc flows? (Do not round intermediates calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b-2. What is the NPV of the project in Swiss francs? (Do not round intermediate calculations and enter your answer in francs, not in millions, rounded to two decimal places, e.g., 1,234,56789) b-3. What is the NPV in dollars if you convert the franc NPV to dollars? (Do not round intermediate calculations and enter your answer in dollars, not in millions, rounded to two decimal places, e.g., 1,234,567.89) a. a. NPV b-1. Return on franc flows %

You are evaluating a proposed expansion of an existing subsidiary locate Switzerland. The cost of the expansion would be SF 18 million. The cash flows from project would be SF 4.6 million per year for the next five years. The dollar requ return is 12 percent per year, and the current exchange rate is SF 1.11. The going rat Eurodollars is 6 percent per year. It is 3 percent per year on Euroswiss. Use approximate form of interest rate parity in calculating the expected spot rates. a. Convert the projected franc flows into dollar flows and calculate the NPV. (Do round intermediate calculations and enter your answer in dollars, not in milli rounded to two decimal places, e.g., 1,234,567.89) b-1. What is the required return on franc flows? (Do not round intermediat calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b-2. What is the NPV of the project in Swiss francs? (Do not round intermediate calculations and enter your answer in francs, not in millions, rounded to two decimal places, e.g., 1,234,567.89) b-3. What is the NPV in dollars if you convert the franc NPV to dollars? (Do not round intermediate calculations and enter your answer in dollars, not in millions, rounded to two decimal places, e.g., 1,234,567.89) approximate form of interest rate parity in calculating the exp a. Convert the projected franc flows into dollar flows and round intermediate calculations and enter your answe rounded to two decimal places, e.g., 1,234,567.89) b-1. What is the required return on franc flows? (Do not roun - calculations and enter your answer as a percent round e.g., 32.16.) b-2. What is the NPV of the project in Swiss francs? (Do not r calculations and enter your answer in francs, not in mi decimal places, e.g., 1,234,567.89) b-3. What is the NPV in dollars if you convert the franc NPV tc intermediate calculations and enter your answer in dol rounded to two decimal places, e.g., 1,234,567.89)