My Math Forum  

Go Back   My Math Forum > Science Forums > Economics

Economics Economics Forum - Financial Mathematics, Econometrics, Operations Research, Mathematical Finance, Computational Finance

LinkBack Thread Tools Display Modes
April 24th, 2013, 08:55 PM   #1
Joined: Apr 2013

Posts: 1
Thanks: 0

(Int'l Finance) Compute NPV from project/parent's viewpoint

I am studying for my 3rd and final exam for my last semester of college and this problem is just giving me fits. I cannot seem to figure it out. Any help would be appreciated. And please show your work. Thanks!

Question: Evaluate the following project from both a local and the parent's viewpoint (that is, find the NPV of the project in terms of $ and , respectively).

1) The foreign project has a life of three years. The initial investment on long-term capital is $30m. The required (one-time) increase in working capital is $5m.
2) Annual revenue in each of the three years will be 3000m. Annual costs of goods sold will be 1000m.
3) Japan: beta = 2, risk-free rate (Rf) = 5%, expected rate of return (Rm) = 8%, before-tax cost of debt (Rd) = 6%, 40% debt and 60% equity;
U.S.: beta = 1.5, Rf = 3%, Rm = 10%, Rd = 5%, 40% debt and 60% equity.
4) Current spot rate: 100/$; Annual inflation rate in Japan is 4%; Annual inflation rate in the U.S. is 2%.
5) Corporate tax rate is 35%; straight-line depreciation method.
westonreed is offline  

  My Math Forum > Science Forums > Economics

compute, finance, intl, npv, project or parent, viewpoint

Search tags for this page
Click on a term to search for related topics.
Thread Tools
Display Modes

Similar Threads
Thread Thread Starter Forum Replies Last Post
lexical parent shaharhada Computer Science 1 February 7th, 2014 12:20 PM
Finding Lowest Common Ancestor Given Parent Node (JAVA) eulerrules1 Computer Science 0 April 10th, 2012 12:00 PM
I'm a parent going back to school newphorik Algebra 10 June 23rd, 2011 10:51 PM
I'm a parent going back to school part 2 newphorik Algebra 4 June 21st, 2011 01:27 PM
the donkey and the boat project .. very chalenging project izzyiss Calculus 0 November 30th, 2008 10:52 AM

Copyright © 2019 My Math Forum. All rights reserved.