Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. victory mnc company plans to pursue a project in i

Victory MNC company plans to pursue a project in Italy that will generate revenue of...

60.1K

Verified Solution

Question

Finance

Victory MNC company plans to pursue a project in Italy that will generate revenue of 15 million Euro at the end of the next 3 years. It will have to pay operating expenses of 6 million Euro per year. In addition, depreciation is expected to be 1 million Euro per year. The project can be sold for 60 million Euro at the end of its life (net of any capital gain taxes). The Italian government charges 25 percent tax rate on profits. The parent company will finance the project which costs Euro 30 million if it decides to undertake it. The company uses a discount rate of 12% for projects with similar risk. The spot rate of the Euro is currently $1.22 and is expected to depreciate by 5 percent each year for the next three years.

Fill in the following blanks for the required variables to find the NPV. Insert your answers in MILLION. For example, for 1.5 million, insert 1.5. Round your answers to 2 decimal places.

Year

0

1

2

3

Cash flow in Dollar ($)

PV of cash flow

NPV =

Should you accept the project? (YES/NO)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students