An MNC Is Considering Establishing a Two-Year Project in New

question 18

Multiple Choice

An MNC is considering establishing a two-year project in New Zealand with a $30 million initial investment. The firm's cost of capital is 12%. The required rate of return on this project is 18%. The project is expected to generate cash flows of NZ$12 million in Year 1 and NZ$30 million in Year 2, excluding the salvage value. Assume no taxes, and a stable exchange rate of $.60 per NZ$ over the next two years. All cash flows are remitted to the parent. What is the break-even salvage value?

• A) about NZ$11 million.
• B) about NZ$15 million.
• C) about NZ$31 million.
• D) about NZ$37 million.
• E) about NZ$25 million.

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Definitions:

Restructuring Plan

A strategic plan implemented by an organization to fundamentally change its financial or operational structures, often in response to financial difficulties or to improve efficiency and competitiveness.

Recruitment

The process of identifying, attracting, evaluating, and hiring individuals to fill vacant positions within an organization.

Qualified Pool

A group of individuals who meet the specified criteria or qualifications for a particular role, position, or opportunity.

Job Applicants

Individuals who apply for a position within an organization, signaling their interest in joining the company.