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Business, 02.08.2021 21:50 o11011195

You are evaluating a proposed expansion of an existing subsidiary located in Switzerland. The cost of the expansion would be SF 13.8 million. The cash flows from the project would be SF 4.1 million per year for the next five years. The dollar required return is 12 percent per year, and the current exchange rate is SF 1.12. The going rate on Eurodollars is 5 percent per year. It is 4 percent per year on Euroswiss. Required:
a. Convert the projected franc flows into dollar flows and calculate the NPV.
b. What is the required return on franc flows?
c. What is the NPV of the project in Swiss francs?

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