CAN YOU HELP WITH MAKING THE CASH PART OF THIS CORRECT AND THEN I

CAN DO THE SPREADSHEET WITH CORRECTED FIGURES PLEASE AND THANK YOU
FOREIGN CAPITAL BUDGETING Sandrine 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?
Appendix
Problem 19-17
Initial Investment
$2,000
Expected Cash inflow in one year
$2,400
Projected Risk adjusted cost of capital
10%
Current Rate Franc to US
0.96
US Annual Risk-Free Rate
3%
Swiss Annual Risk-free Rate
1.50%
Part A : Net Present Value and IRR -US Company
Year
Cash flows
Factors (12%)
PV OF CF (Initial investment x factors)
0
($2,000)
1/1.12^0=1
($2,000)
1
$2,400
1/ (1.12) ^1=0.893
$1,071.43
Net Present Value
$71.43

IRR= Y
1000=1200/(1+y)
Y= (1200/1000)-1
y=1.2-1

Rate of Return
20%

Part B: Expected Forward Exchange Rate
Forward Exchange Rate/Spot Exchange Rate
1 + rSwiss/1+rUS
Forward Exchange Rate/0.9
1+3.25%/1+5%
Forward Exchange Rate/0.9
1.0325/1.05
Forward Exchange Rate/0.9
0.9833
Forward Exchange Rate
0.9833*0.885
Forward Exchange Rate 1 year forward
1USD=0.885 (Swiss)    1Swiss = 1/0.885=1.13 USD

Part C: NPV and IRR for Solitaire
Year
Cash Flows
CF (Swiss)
Factor (12%)
PV of CF
0
($1,000)
-900
1
-900
1
$1,200
1,062
0.893
948.21
Net Present Value (Swiss Franc)
48.21

Cash Inflow
1,000*0.90
900 (Swiss)
Cash Outflow
1,200 * 0.855
1,062 (Swiss)
IRR (Cash Outflow/Cash Inflow)-1

1+y=
1,062/900
1.18-1
IRR
18%

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