A USfirm Can Invest DM10 Million in Its German Subsidiary and and Receive

question 99

Essay

A U.S.firm can invest DM10 million in its German subsidiary and receive a return of €4.3 million annually for 3 years.The spot rate is €1.6/$(U.S.), the U.S.rate of inflation is expected to be 4% annually, and the German rate is expected to be 3% annually.If the appropriate risk-adjusted cost of capital in Dollars is 14%, does the project appear to have a positive NPV?

---

Definitions:

Regulate Behavior

The act of controlling or directing actions or conduct according to rules, norms, or laws.

Developmental Period

A phase in an individual's life characterized by specific types of growth or change.

Brain Development

The process of growth and change in the brain's structure and function throughout a person’s lifespan.

Cognitive Development

The process by which individuals acquire and understand knowledge, develop thinking and problem-solving skills, and learn to perceive the world.