NPV Analysis, business and finance homework help

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NPV Analysis

Resources

For the NPV Analysis component of your course project, complete the following (Parts 1–3) using the Excel templates in the Resources:

  1. Determine the net present value (NPV) of the Wolverine Corporation multinational expansion project, assuming the project will have an impact on the parent company’s cash flows, and recommend whether Wolverine should accept or reject it. Discuss your recommendation.
  2. Assume that Wolverine is considering an alternative financing arrangement in which the parent would invest an additional $10 million to cover the working capital requirements, so that the subsidiary would avoid taking the New Zealand bank loan. If this arrangement is used, the selling price of the subsidiary (after subtracting any capital gains taxes) is expected to be NZ $18 million higher. Use NPV analysis to determine the impact of this alternative financing arrangement on the firm’s decision to accept or reject the New Zealand project.
  3. From the parent’s perspective, would the NPV of this project be more sensitive to exchange fluctuations if the subsidiary uses New Zealand financing to cover the working capital or if the parent invests more of its own funds to cover the working capital? Explain.

Refer to the background data provided in the course project description as you prepare each component of the project. Contact your instructor with any questions about this assignment or your course project.

Submit your responses in the assignment area. Refer to the scoring guide prior to submission to ensure you meet all evaluation criteria.

Note: Your instructor may also use the Writing Feedback Tool to provide feedback on your writing. In the tool, click the linked resources for helpful writing information.

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