question archive Your firm is based in France and is considering an investment opportunity in the United States
Your firm is based in France and is considering an investment opportunity in the United States
Subject:AccountingPrice: Bought3
Your firm is based in France and is considering an investment opportunity in the United States. The project will last for 2 years and require an investment of USD 10,000,000 at time zero. This initial investment has to be depreciated by 50% the first year and the remaining 50% in the second year. Revenues are forecasted to be USD 8,000,000 and USD 12,000,000 in year 1 and year 2, respectively. Costs will amount to USD 1,500,000 in both years. Terminal value is expected to be zero. Additional information: tax rate is 30% in US and 40% in France. Current spot exchange rate is . Inflation rate in France is 4% and ????(???????????? ????????????) = ???????????? /????????????1.3 in the US is 6%
a) The optimal debt ratio of the French firm is 60%. What is the borrowing capacity created by the project in EUR?
