Jawaharlal Nehru Techn New Bagging Plant Investment Decision Discussion
Question Description
Part A:
Carpet Baggers Inc. is proposing to construct a new bagging plant in a country in Europe. The two prime candidates are Germany and Switzerland. The forecasted cash flows from the proposed plants are as follows:
|
|
C0 |
C1 |
C2 |
C3 |
C4 |
C5 |
C6 |
IRR (%) |
|
Germany (Millions of Euros) |
-60 |
+10 |
+15 |
+15 |
+20 |
+20 |
+20 |
15.0% |
|
Switzerland (Millions of Euros) |
-120 |
+20 |
+30 |
+30 |
+35 |
+35 |
+35 |
12.8% |
The spot exchange rate for euros is $1.3/, while the rate for Swiss francs is CHF 1.5/$. The interest rate is 5% in the United States, 4% in Switzerland, and 6% in the euro countries. The financial manager has suggested that, if the cash flows were stated in dollars, a return in excess of 10% would be acceptable.
Should the company go ahead with either project? If it must choose between them, which should it take?
Please explain your answer in detail and provide in-text citations.
Part B:
please prepare a professional PowerPoint presentation summarizing your findings for Part A. The presentation will consist of your major findings, analysis, and recommendations in a concise presentation of 18 slides (minimum). An agenda, executive summary, and references slides should also be included
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