Question
In: Finance
Redy Tody, an Indian- based pharmaceutical firm, is considering a project in Canada. The following table...
Redy Tody, an Indian- based pharmaceutical firm, is considering
a project in Canada. The following table lists foreign currency
(CAD) cash flows. The CAD is currently trading at CADINR equals 50.
Assume that future spot rates are equal to the current spot rate.
The WACC of the firm is 11 percent.
Year Cash
Flows (CAD)
0 -200,000
1–
4 50,000
5 100,000
Calculate the NPV of the project in INR.
Solutions
Expert Solution
Ans $ 14467.42
| Year | Project Cash Flows (i) | DF@ 11% | DF@ 11% (ii) | PV of Project A ( (i) * (ii) ) |
| 0 | -200000 | 1 | 1 | (2,00,000.00) |
| 1 | 50000 | 1/((1+11%)^1) | 0.901 | 45,045.05 |
| 2 | 50000 | 1/((1+11%)^2) | 0.812 | 40,581.12 |
| 3 | 50000 | 1/((1+11%)^3) | 0.731 | 36,559.57 |
| 4 | 50000 | 1/((1+11%)^4) | 0.659 | 32,936.55 |
| 5 | 100000 | 1/((1+11%)^5) | 0.593 | 59,345.13 |
| TOTAL | 14,467.42 | |||
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