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A project in South Korea requires an initial investment of 3 billion South Korean won. The...

A project in South Korea requires an initial investment of 3 billion South Korean won. The project is expected to generate net cash flows to the subsidiary of 4 billion and 6 billion won in the two years of operation, respectively. The project has no salvage value. The current value of the won is 1,120 won per U.S. dollar, and the value of the won is expected to change to 1,200 in two years. The required rate of return is 13 percent. The funds are blocked and the parent company will not be able to remit them back to the U.S. for 2 years

(1) Calculate NPV

(2) Should the company go ahead with the project? Why or why not?

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