This 19 page paper examines a case study supplied by the student. North Star have to decide whether or not to make an investment in West Utopia. The paper looks at the questions and shows the calculations to needed for the case study including the net present valuations calculation and the exchange rate calculations. The bibliography cites 5 sources.
Name of Research Paper File: TS14_TENstar1.rtf
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an opportunity coat, the cost of not being able to invest the same amount of money elsewhere. For most businesses there will be an obligation to meet the needs of
their stakeholders, of which shareholders are usually the primary group (Nellis and Parker, 2000). This means making sure that profits are maximised. Were a complex investment is possible the different
scenarios may all need to be calculated. In the case supplied by the student there is a company North Star. They
are looking at making an investment in a project in West Utopia. They have two choices for how this project will be funded, with or without a loan. However there
is also the additional complication as in this case the project is in a different country and as such there is the need consider the exchange rates that may be
seen and the way that these may move over time. Therefore as well as looking at the project in general terms we also need to consider the different exchange rate
scenarios in order to assess the tangible return to the US parent company. The comparison needs to be underttaken with the use of
a net present value calculation. This is the way in which future cash flows can be discounted into todays terms to allow for an easier comparison. The NPV is then
followed by the different scenarios that allow for the different exchange rate so that the conditions of the market may be allowed for. When this s competed we can perform
a weighted average valuation to assess what the return may be overall. This allows for the different scenario to all being included in proportion to their likelihood. The First
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