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Bulldog Co plans to set up a subsidary company in Latvia. The initial investment will be €6million. The subsidary is projected to generate the following cashflows over its four-year life:
There is a withholding tax of 10% on returned profits and the exchange rate is forecast to remain constant at €1.6 / $1. At the end of the four-year period, the Latvian government will buy the plant for €2.5million, which can be repatriated free of withholding taxes. If the required rate of return is 14%, calculate the net present value of the project (to the nearest $). $________. |