Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Business Economics Expert

NPV - over or under estimated

Assume that a less developed country called LDC encourages direct foreign investment (DFI) in order to reduce its unemployment rate, currently at 15 percent. Also assume that several MNCs are likely to consider DFI in this country. The inflation rate in recent years has averaged 4 percent. The hourly wage in LDC for manufacturing work is the equivalent of about $5 per hour. When Piedmont Co. develops cash flow forecasts to perform a capital budgeting analysis for a project in LDC, it assumes a wage rate of $5 in Year 1 and applies a 4 percent increase for each of the next 10 years. The components produced are to be exported to Piedmont's headquarters in the United States, where they will be used in the production of computers. Do you think Piedmont will overestimate or underestimate the net present value of this project? Why? (Assume that LDC's currency is tied to the dollar and will remain that way).

 

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M926671

Have any Question? 


Related Questions in Business Economics

Use demand-supply analysis ndash with appropriately drawn

Use demand-supply analysis – with appropriately drawn graphs – to briefly explain the effects (i.e., increase or decrease) on the equilibrium price and quantity from the following: a. In the past, the success of Tiger Wo ...

The mission statement for quaker oats cites its origins

The mission statement for Quaker Oats cites its origins, “inspired by the power and wholesome goodness of the amazing oat.” Frito-Lay looks a little more to the present, citing its mission “To be the world’s favorite sna ...

For individuals who are holding money or fixed dollar value

For individuals who are holding money or fixed dollar value assets, inflation has the effect of: A. improving their ability to purchase goods and services with those dollars B. reducing their ability to purchase goods an ...

Blaxo balloons manufactures and distributes birthday

Blaxo Balloons manufactures and distributes birthday balloons. At the beginning of the year? Blazo's common stock was selling for ?$17.95 but by year end it was only ?$15.28. If the firm paid a total cash dividend of $ 1 ...

Supply chain management is one of the most important

Supply chain management is one of the most important factors in the industry in which I work, bio-pharmaceutical manufacturing. For each manufacturing run, the bill of materials (BOM) can be thousands of items long which ...

Economics for business assignment-topics for individual

Economics for Business Assignment- Topics for Individual essay - Choose any One of the topics from the following list: 1. Scarce resources- which resource and in which country/industry are seen as scarce and what is bein ...

1 which of the following is not a characteristic of a

1. Which of the following is NOT a characteristic of a perfectly competitive market? A) a large number of firms in a market B) selling a standardized product C) substantial barriers to entry D) an individual firm having ...

Following are examples of typical economic decisions made

Following are examples of typical economic decisions made by the managers of a firm. Determine whether each is an example of what, how, or for whom. Should the company make its own spare parts or buy them from an outside ...

Many organizations express concern about turnover because

Many organizations express concern about turnover because of the high costs of hiring and training new employees. Although not all turnover is negative, organizations can benefit from being able to measure and quantify i ...

Quantitative problem jenna is a single taxpayer with no

Quantitative Problem: Jenna is a single taxpayer with no dependents so she qualifies for one personal exemption. During 2013, she earned wages of $122,000. She doesn't itemize deductions, so she will take the standard de ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate