# Calculation Of NPV For A Project With Inflow, Outflow And Foreign Exchange Rate Given

Question

Baps Corporation is considering the establishment of a subsidiary in Norway. The initial investment required by the parent is NOK40 million. If the project is undertaken, Baps would terminate the project after four years. Baps' (US dollar) cost of capital is 13%, and the project is of the same risk as Baps' existing projects. All net cash flows generated from the project will be remitted to the parent at the end of each year. Listed separately below are the estimated cash inflows and outflows the Norwegian subsidiary will generate over the project's lifetime in millions of Norwegian kroner (NOK), and Baps forecast of future exchange rates. The current exchange rate of the Norwegian kroner is \$0.135/NOK. What is the NPV, in \$, of the Norwegian project?

 Year 1 2 3 4 Inflow NOK18 NOK25 NOK29 NOK40 Outflow NOK8 NOK10 NOK12 NOK15 FX rate \$0.13/NOK \$0.14/NOK \$0.12/NOK \$0.15/NOK

Summary

The question belongs to Finance and it discusses about calculation of NPV for a project with inflow, outflow and foreign exchange rate given.

Total Word Count 78

• Rasha

this is a very good website

• maani

I have 50 questions for the same test your page is showing only 28

• joeanne

• joeanne

hi can anyone help or guide me to my assignments. thanks

• Monik

• Cristina

This solution is perfect ...thanks

• Janete

Hello Allison,I love the 2nd image that you did! I also, had never heard of SumoPaint, is something that I will have to exolpre a bit! I understand completely the 52 (or so) youtube videos that you probably watched. Sometimes they have what you want, sometimes they don't! However, it is always satisfying when you are able to produce something that you have taught yourself. Great job!Debra 0 likes

• Sandeep

Perfect bank of solution.

• Oxana

great !

• Paul Brandon-Fritzius

thanks for the quick response. the solution looks good. :)

• tina Johnson

thnx for the answer. it was perfect. just the way i wanted it.

• Giuseppe

works fine.