You work for a firm whose home currency is the Russian Ruble (RUB) and that is considering a foreign investment. The investment yields expected after-tax British Pound (GBP) cash flows (in millions) as follows:-GBP285 in Year O, and GBP145 in each of the 3 years of the life of the project. The expected rates of inflation in each country are constant per year: 7% in Russia, and 1.50% in the UK. From the project's perspective the required return is 6.83%, while from the parent's perspective, the required rate of return is 12.41%. The spot exchange rate is GBP0.009531/RUB.
i. What is the NPV of the project from the parent company's perspective?

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Answer rating: 100% (QA)

To calculate the NPV Net Present Value of the project from the parent companys perspective we need t... View the full answer