Groupe Ariel S.A. Case Study Help
(f) Difference
The estimated NPV in Peso’s is greater than the estimated NPV in Euro’s. The difference occurs in the inflation rate of both the countries. There is an evident relationship between both of the NPVs, depending on the basis of their Inflation Rate and Spot Rate.
(g)
The revised incremental cash flows in Pesos is estimated in the attached excel file by changing the inflation rate by 4%. The same procedure is followed as in part (f). The NPV is estimated as $218,902.
Question 4
(a)
Change in exchange rate has been calculated by dividing per unit cost in Mexico and per unit cost in France. NPV has been calculated by using the same procedure, which is $126,090.
(b)
Net cash flows taken from question 1, exchange rate has been calculated by dividing per unit cost in Mexico and per unit cost in France.NPV has been calculated by using the same procedure, and the estimated NPV is $215,710.....................................
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