# HMES80 4805 – ABC LTD, a U.K. multinational enterprise is contemplating

01 / 10 / 2021 Projects

This paper circulates around the core theme of HMES80 4805 – ABC LTD, a U.K. multinational enterprise is contemplating together with its essential aspects. It has been reviewed and purchased by the majority of students thus, this paper is rated 4.8 out of 5 points by the students. In addition to this, the price of this paper commences from £ 99. To get this paper written from the scratch, order this assignment now. 100% confidential, 100% plagiarism-free.

## HMES80 4805 – ABC LTD, a U.K. multinational enterprise is contemplating

Question 2 [17 Marks]ABC LTD, a U.K. multinational enterprise is contemplating making a foreign capital expenditure in South Africa. The initial cost of the project is ZAR 50 million. The annual cash flows over the five year economic life of the project are estimated to be ZAR 13 million, ZAR 18 million, ZAR 25 million, ZAR10 million, and ZAR9 million. The parent firm’s cost of capital in pounds is 7.5 percent. Long-run inflation is forecasted to be 4 percent per annum in the U.K. and 12 percent in South Africa. The current spot foreign exchange rate is ZAR/? = 15.56. Determine the NPV for the project in ? by:(a) Calculating the NPV in ZAR using the ZAR equivalent cost of capital according to the Fisher Effect and then converting to ? at the current spot rate. [5](b) Converting all cash flows from ZAR to ? at Purchasing Power Parity forecasted exchange rates and then calculating the NPV at the pound cost of capital. [7](c) What is the NPV in pounds if the actual pattern of ZAR/? exchange rates is:S(0) = 15.56, S(1) = 14.56, S(2) = 16.72, S(3) = 15.78, S(4) = 16.54, and S(5) = 16.32?Justify the difference in the actual and the forecasted NPV [5]

International House, 12 Constance Street, London, United Kingdom,
E16 2DQ

Company # 11483120

## Benefits You Get

• Free Turnitin Report
• Unlimited Revisions
• Installment Plan
• Plagiarism Free Guarantee
• 100% Confidentiality
• 100% Satisfaction Guarantee
• 100% Money-Back Guarantee
• On-Time Delivery Guarantee

+44 7340 9595 39
+44 20 3239 6980
[email protected]
AKOSZTEC “International House, 12 Constance Street, London, United Kingdom, E16 2DQ”

Hire Researcher
Rated 4.7/5 based on 8956 Reviews

## Supporting Pages

FLAT 50% OFF ON EVERY ORDER. Use "FLAT50" as your promo code during checkout