(Solution Download) A US multinational is contemplating a production facility in the UK. The production will be sold...


A US multinational is contemplating a production facility in the UK. The production will be sold locally in the UK. The cost of the facility is estimated at $150,000,000 USD. Here is other pertinent information on the project: Year 1 2 3 4 Price per unit GBP 1,500 1,550 1,600 1,800 Unit sales 50,000 180,000 360,000 500,000 Variable costs/Unit GBP 1,000 1,200 1,300 1,500 Fixed expenses GBP 150,000,000 75,000,000 87,000,000 95,000,000 Noncash expenses GBP 50,000,000 50,000,000 50,000,000 50,000,000 British tax rate 35% 35% 40% 40% Withholding tax rate 10% 10% 10% 10% Profit remittance % 10% 50% 75% 100% Exchange rate $/GBP 1.35 1.45 1.75 1.35 The required rate of return in 12%. Examine this project form the parent?s perspective

 







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