dollar. What is the NPV of this investment? Is it a good opportunity? What is the NPV of this investment? The NPV of this investment is (Ra nd to the nearest dollar)

International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
Chapter16: Country Risk Analysis
Section: Chapter Questions
Problem 24QA
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You have an investment opportunity in Japan. It requires an investment of $1.06 million today and will produce a cash flow of ¥109 million in one year with no risk. Suppose the risk-free interest rate in the United States is 3.8%, the risk-free interest rate in Japan is 2.5%, and the current competitive exchange rate is ¥110 per
dollar. What is the NPV of this investment? Is it a good opportunity?
What is the NPV of this investment?
The NPV of this investment is S. (Round to the nearest dollar)
Transcribed Image Text:You have an investment opportunity in Japan. It requires an investment of $1.06 million today and will produce a cash flow of ¥109 million in one year with no risk. Suppose the risk-free interest rate in the United States is 3.8%, the risk-free interest rate in Japan is 2.5%, and the current competitive exchange rate is ¥110 per dollar. What is the NPV of this investment? Is it a good opportunity? What is the NPV of this investment? The NPV of this investment is S. (Round to the nearest dollar)
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