Question

9.(10 points) A U.S-based construction compan The company will recoup invested USS 200 million by receiving Bt 2,500 million at the end of year 1 million at the end of year 2, and Bt 2,500 million at the end of year 3. The current exchange rate is B Financial market data suggests that the Baht will depreciate at 3.5% per year in the near term and that the dollar cost of capital is 12.00% Report all Baht and dollar figures as # ## millions, all exchange rates percentage figures as #.##% y is contemplating construction of a power plant in Thailand. as # ## and all Bt CFs (millions) BUS (3.5% annual depreciation) SCFs (millions) Year as proposed 26.10 (S 200.00) 1 Bt 2,500 2 Bt 2,500 3 Bt 2,500 NPVs $ IRRS

Answer 1

Year (n)	CF (in Bt million)	Bt depreciation rate (%) ('r)	Bt/$ rate (rate*(1+r))	CF (in $ million) CF (in Bt)/ rate	PV of CFs (CF/(1+12%)^n
0			26.10	(200.00)	(200.00)
1	2,500.00	3.50%	27.01	92.55	82.63
2	2,500.00	3.50%	27.96	89.42	71.28
3	2,500.00	3.50%	28.94	86.39	61.49
				16.49%	15.41

NPV = $15.41 million

IRR (using IRR function) = 16.49%