What is the net present value of this project in us dollars


You want to invest in a project in Canada. The project has an initial cost of C$810,000 and is expected to produce cash inflows of C$270,000 a year for five years. The project will be worthless after three years. The expected inflation rate in Canada is 2.2 percent while it is 2 percent in the U.S. The applicable interest rate in Canada is 10.5 percent. The current spot rate is C$1 = $.96. What is the net present value of this project in U.S. dollars using the foreign currency approach?

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Financial Management: What is the net present value of this project in us dollars
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