Your next option in your project

Click Here to Download this Answer Instantly

Your next option in your project is building the plant in China, but exporting the product back to the U.S. for sale.

Construct a table in Excel and calculate the NPV of a plant in China that exports product to the U.S. market. Start with your NPV spreadsheets from the last two weeks, and add the following adjustments:

1. The current exchange rate is that used in Week-3/1 USD.

2. Transportation from your China plant to the U.S. is $1/UNIT

3. The current tariff on apparel imports is 15% of value

4. The finished goods are transferred into the U.S. at a value of 50% over variable cost

5. Assume the discount rate, tax rate and depreciation are taken as the U.S. project in Week-2

Calculate the following:

• Project NPV in USD

• Project NPV if the exchange rate changes by +/-20%, and by +/-70%