International Financial Management FIN4802
FIN4802 Assignment 02
Due Date: 27 September 2021
Unique Number: 616635
Preview Question 1
QUESTION 1
The expected spot rate of currency Y in one year is 0.6 euros × (1 – 0.10) = 0.54 euros/ Y.
Below are the results of each of the four scenarios:
I. If the Gredia firm performs well and there is no corruption, the net present value
of the project is: [(400,000Y × 0.54 euros)/ (1.26)1]– 300,000 euros = -128 571.43
euros
II. If Gredia performs well and there is corruption, there will not be a payment to
Tovar, so the net present value of the project is –300,000 euros.
FIN4802 Assignment 02
Due Date: 27 September 2021
Unique Number: 616635
Preview Question 1
QUESTION 1
The expected spot rate of currency Y in one year is 0.6 euros × (1 – 0.10) = 0.54 euros/ Y.
Below are the results of each of the four scenarios:
I. If the Gredia firm performs well and there is no corruption, the net present value
of the project is: [(400,000Y × 0.54 euros)/ (1.26)1]– 300,000 euros = -128 571.43
euros
II. If Gredia performs well and there is corruption, there will not be a payment to
Tovar, so the net present value of the project is –300,000 euros.
