In: Finance
A project in South Korea requires an initial investment of 2 billion South Korean Won. The project is expected to generate net cash flows to the subsidiary of 3 billion and 4 billion won in the 2 years of operation, respectively. The project has no salvage value. The current value of the won is 1,100 won per U.S. dollar and the value of the won is expected to remain constant over the next 2 years. Calculate the net present value of this project if the required rate of return is 13 percent and the current exchange rate is 1,005 won per U.S. dollar.
Solution:-
To calculate NPV of the Project-
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