#4 The spot exchange rate today is ¥125 = $1. The U.S. discount rate is 10%;...

The spot exchange rate today is ¥125 = $1. The U.S. discount rate is 10%; inflation over the next three years is 3% per year in the U.S. and 2% per year in Japan. There is a project that requires an initial investment of ¥1,000,000, and generates ¥500,000 each year in the following 3 years.
Find the dollar cash flows to compute the dollar-denominated NPV of this project.

Exchange rate in year 1 = _____ (Round your answer to 2 decimal places)
Exchange rate in year 2 = _____ (Round your answer to 2 decimal places)
Exchange rate in year 3 =_____ (Round your answer to 2 decimal places)

Once you have the exchange rates for the next three years, find dollar cash flows to compute the dollar-denominated NPV = $_____

Use the same question from #4. The spot exchange rate today is ¥125 = $1. The U.S. discount rate is 10%; inflation over the next three years is 3% per year in the U.S. and 2% per year in Japan. There is a project that requires an initial investment of ¥1,000,000, and generates ¥500,000 each year in the following 3 years.
Find the Japanese cost of capital to compute the dollar-denominated NPV of this project.

Japanese cost of capital =_____ %. (Round your answer to 3 decimal places)
¥NPV = ¥_____
Convert ¥NPV into $NPV = $_____

(Please type work do not write, thank you!)

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Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 2 years ago

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