The US company is evaluating a proposal to build a plant in Portugal explain what it must do to determine the NPV of the project which is expected to have cash-in and outflow in different currencies.
answer in word not in excel
what required return should the company use to determining NPV?
answer in word not in excel
Data for this questions
(euro)
months until payment due 15
US dollar inflation rate 1.39%
euro area inflation rate 1.26%
US dollar interest rate 1.56%
euro area interest rate 2.25%
spot exchange rate EUR/USD 1.1640
required return for similar project in US 18.5%