Walden University International Financial Capital Budgeting Paper Excel spreadsheet with problems a,b,c. Do proper calculations and a word report. Use USA

Walden University International Financial Capital Budgeting Paper Excel spreadsheet with problems a,b,c. Do proper calculations and a word report. Use USA based references and business practices.

How do international factors affect decision making? Although the same basic principles of capital budgeting apply to both foreign and domestic operations, there are some key differences. For example, cash flows must be converted into the parent company’s currency, so they are subject to exchange rate risk. In addition, the cost of capital may be different for a foreign project compared with an equivalent domestic project.

For this Assignment, complete Problem 19-17, Parts a, b, and c on page 697 of your course text. This case examines the effects of exchange rates on net present values and rates of return.

In addition to solving for the rates of return from the U.S. and Swiss points of view, write a paragraph that summarizes your key learning points from this case. Be sure to include your calculations as an appendix.

FOREIGN CAPITAL BUDGETING Sandrine Machinery is a Swiss multinational manufacturing

company. Currently, Sandrine’s financial planners are considering undertaking a 1-year

project in the United States. The project’s expected dollar-denominated cash flows consist

of an initial investment of $2,000 and a cash inflow the following year of $2,400. Sandrine

estimates that its risk-adjusted cost of capital is 10%. Currently, 1 U.S. dollar will buy

0.96 Swiss franc. In addition, 1-year risk-free securities in the United States are yielding

3%, while similar securities in Switzerland are yielding 1.50%.

a. If this project was instead undertaken by a similar U.S.-based company with the same

risk-adjusted cost of capital, what would be the net present value and rate of return

generated by this project?

b. What is the expected forward exchange rate 1 year from now?

c. If Sandrine undertakes the project, what is the net present value and rate of return of

the project for Sandrine?

BY DAY 7

Submit your Assignment (both your Excel and Word files).

General Guidance on Application Length:

Your Assignment, due by Day 7, will typically be 2–3 pages in length as a general expectation/estimate. Refer to the rubric for the Week 7 Assignment for grading elements and criteria. Your Instructor will use the rubric to assess your work.