Consider the following international investment opportunity. It involves a gold mine that can be opened...
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Consider the following international investment opportunity. It involves a gold mine that can be opened at a cost, then produces a positive cash flow, but then requires environmental clean-up: Picture Below The current exchange rate is $1.60 = 1.00. The inflation rate in the U.S. is 6 percent and in the euro zone 2 percent. The appropriate cost of capital to a U.S.-based firm for a domestic project of this risk is 8 percent.
What is the dollar-denominated IRR of this project? What is the euro-denominated IRR of this project? Find the dollar cash flows to compute the dollar-denominated NPV of this project. Please note that your answer is worth ZERO POINTS if it does not contain currency symbols.
Find the euro-zone cost of capital to compute is the dollar-denominated NPV of this project.??
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