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It is 2024 and Pork Barrels Inc. is considering construction of a new barrel plant in Spain. The forecast cash flows in millions of euros are as follows CO -85 C C2 +21 G Cs +26 The spot exchange rate is USD118 EUR1. The interest rate in the United States is 7% and the euro interest rate is 5% You can assume that pork barrel production is effectively risk-free. o. Calculate the NPV of the euro cash flows from the project. What is the NPV in dollars? b. What are the dollar cash flows from the project if the company hedges against exchange rate changes? c. Suppose that the company expects the euro to depreciate by 4% a year . Does this make the project less attractive? d. Suppose that Pork Barrels decides to go ahead with the project despite its concerns about the euro Would the company do better to finance it by borrowing the present value of the project in euros or in dollars? Complete this question by entering your answers in the tabs below. Required A Required B Required c Required What are the dollar cash tlows from the project if the company hedges against exchange rate changes? (Oo not round intermediate calculations. Enter your answers in million rounded to 2 decimal places. Negative amounts should be indicated by a minus sign CL puse that Pork Barrels decides to go ahead with the project despite its concerns about the euro. Would the company do bette it by borrowing the present value of the project in euros or in dollars? Complete this question by entering your answers in the tabs below. Required A Required B Required c Required Calculate the NPV of the entro cash flows from the project. What is the NPV in dollars? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) NPV in euros NPV in dollars million 19.76 million $ Required 8 > Check my wo d. Suppose that Pork Barrels decides to go ahead with the project despite its concems about the euro. Would the company do better to finance it by borrowing the present value of the project in euros or in dollars? Complete this question by entering your answers in the tabs below. Required A Required B Required Required What are the dollar cash flows from the project if the company hedges against exchange rate changes? (Do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places. Negative amounts should be indicated by a minus sign.) Year 5 Million 0 1 2 3 4 5 It is 2024 and Carpet Baggers Inc is proposing to construct a new bagging plant in a country in Europe. The two prime candidates are Germany and Switzerland. The forecast cash flows from the proposed plants are as follows Co -64 -124 Germany (m11110ns of euros) Switzerland millions of Swiss Franco) *14 23 +29 +19 +34 +34 +24 +39 +24 CORRID +24 20.6 +39 16.0 +24 +39 The spot exchange rate for euros is USD13 EUR1, while the rate for Swiss francs is CHP15 - USD1. The interest rate is 5% in the United States 4% in Switzerland, and 6% in the euro countries. The financial manager has suggested that if the cash flows were stated in dollars, a return in excess of 10% would be acceptable. o. What is the dollar NPV of the German project? b. What is the dollar NPV of the Swiss project? c. Should the company go ahead with the German project, the Swiss project, or neither? (For requirements a & b, do not round Intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) million million b. NPV of German project NPV of Swiss project The company should choose G

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