Question: Question 18 QUESTION 18 Malone plc based in the UK is evaluating its foreign direct investment project in the US. The project has an estimated

Question 18

Question 18 QUESTION 18 Malone plc based in the UK is evaluating

QUESTION 18 Malone plc based in the UK is evaluating its foreign direct investment project in the US. The project has an estimated salvage value of $10 million in real terms at the end of five years. The current spot exchange rate is $1.45 per pound sterling and the dollar is expected to depreciate against sterling by 4% per year and US inflation to average 5% per annum over the next five years. The UK company uses a discount rate of 10% to evaluate foreign direct investment. Which is the sterling present value of the salvage value

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