euros (see table 1 below). The cost of capital in France is 10%, and the spot exchange rate is 6.2 BR$ / 1€ (1 euro buys 6.2 Brazilian reals). The risk-free rate for Brazil is 7% and the risk-free rate for France is 3%. Table 1 Year 0 1 2 3 4 5 CF (in euros) -1000 290 320 370 400 400 What is the project value in Brazilian reals? You should assume that SoCarnes sells forward the future euro cash flows and convert them to Brazilian reals each period.
euros (see table 1 below). The cost of capital in France is 10%, and the spot exchange rate is 6.2 BR$ / 1€ (1 euro buys 6.2 Brazilian reals). The risk-free rate for Brazil is 7% and the risk-free rate for France is 3%. Table 1 Year 0 1 2 3 4 5 CF (in euros) -1000 290 320 370 400 400 What is the project value in Brazilian reals? You should assume that SoCarnes sells forward the future euro cash flows and convert them to Brazilian reals each period.
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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Question
The Brazilian meat company SoCarnes wishes to start production in France. This new production is associated to a project with the following forecasted cash flows in euros (see table 1 below).
The cost of capital in France is 10%, and the spot exchange rate is 6.2 BR$ / 1€ (1 euro buys 6.2 Brazilian reals). The risk-free rate for Brazil is 7% and the risk-free rate for France is 3%.
Table 1
Year |
0 |
1 |
2 |
3 |
4 |
5 |
CF (in euros) |
-1000 |
290 |
320 |
370 |
400 |
400 |
What is the project value in Brazilian reals? You should assume that SoCarnes sells forward the future euro cash flows and convert them to Brazilian reals each period.
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