Frank F.X. Gong, chief economist for China at J.P. Morgan has forecast that the Yuan...
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Finance
Frank F.X. Gong, chief economist for China at J.P. Morgan has forecast that the Yuan will rise to 7.74 Yuan/$ by the end of 2005 and to 7.2 Yuan/$ by the end of 2006. If the after-tax cashflows generated by the two-year, U.S. based project are $12 million at the end of 2005 and $14 million at the end of 2006, and the Chinese cost of capital is 15%, what is the NPV of this project in Yuan? Assume the initial investment in the project is 100 million Yuan.
[Hint: Convert dollar cashflows into yuan cashflows and then calculate the NPV]
Question options:
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| 156.9 million Yuan |
|
| 97 million Yuan |
|
| 59.9 million Yuan |
|
| 57 million Yuan |
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