Impact of Exchange Rates on NPV a.       Describe in general terms how future appreciation of the euro will likely affect the value (from the parent’s perspective) of a project established in Germany today by a U.S.-based MNC. Will the sensitivity of the project value be affected by the percentage of earnings remitted to the parent each year?  b. Repeat this question, but assume the future depreciation of the euro.

International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
Chapter4: Exchange Rate Determination
Section: Chapter Questions
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Impact of Exchange Rates on NPV

a.       Describe in general terms how future appreciation of the euro will likely affect the value (from the parent’s perspective) of a project established in Germany today

by a U.S.-based MNC. Will the sensitivity of the project value be affected by the percentage of earnings remitted to the parent each year?

 b. Repeat this question, but assume the future depreciation of the euro.

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