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You want to invest in a project in Greenland. The project has an initial cost of...

You want to invest in a project in Greenland. The project has an initial cost of G$776,000 and is expected to produce cash inflows of G$397,000 a year for three years. The project will be worthless after three years. The expected inflation rate in Greenland is 4.2 percent while it is 1.2 percent in the U.S. The applicable interest rate in Greenland is 5.87 percent. The current spot rate is G$1 = US$.12. What is the net present value of this project in U.S. dollars using the foreign currency approach? (Find the NPV in G$, then convert to US$ using the spot rate)

$30,209.87

$38,357.72

$36,428.66

$34,529.20

$32,547.36

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Expert Solution

Formula spreadsheet

jeff jeffy answered 8 months ago
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