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$1$

P$3-7($similar to$)$

Question$0\mathrm{.}5/1$ pt

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Part $1$

You have an investment opportunity in Japan. It requires an investment of

$$$$0\mathrm{.}930\mathrm{.}93$

million today and will produce a cash flow of

yen $107107$

million in one year with no risk. Suppose the$$ risk$-$free interest rate in the United States is

$4\mathrm{.}4\%4\mathrm{.}4\%,$

the$$ risk$-$free interest rate in Japan is

$2\mathrm{.}3\%2\mathrm{.}3\%,$

and the current competitive exchange rate is

yen $111111$

per dollar. What is the NPV of this$$ investment? Is it a good$$ opportunity?