An Australian company, JKL Ltd, is examining a potential investment in Germany. The project is expected to
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An Australian company, JKL Ltd, is examining a potential investment in Germany. The project is expected to cost EUR 140 million and have a salvage value of EUR 80 million at the end of its 4-year life. Revenues generated from the project are based on estimated annual sales of 25 million units at a price of €10 each. Variable costs are expected to be €3 per unit and fixed costs are expected to be EUR 50 million per year. The current exchange rate of AUD = 0.65 EUR and the AUD is expected to appreciate at 2% pa over the life of the project. The required return is 14% in AUD. Calculate the NPV of the project and determine whether it should be undertaken.
Related Book For
Accounting Information Systems
ISBN: 9780132871938
11th edition
Authors: George H. Bodnar, William S. Hopwood
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