Apple Inc is planning to set up a project in Japan with an expected life of 5 ye

Question

Apple Inc is planning to set up a project in Japan with an expected life of 5 years. The project is expected to generate a cash flows of Yen 2 million, 2.5 million, 3 million, 3.25 million and 3.5 million over the next five years. The project requires an initial investment of Yen 8 million. The current spot rate of $ and Yen is $1=Yen 105. $ is expected to depreciate by 1.25% per year over the next 5 years against Yen. What is the NPV of this project in $ terms at a cost of capital of 8%? Answer a.$25,959 b.$21.72 million c.$285 million $34,239

Explanation / Answer

b.$21.72 million

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