Caso Wiley International Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Caso Wiley International Case Study Help

Question No. 3

The net cash flows the company available for its parent company, will be:2417, 2711, 3041, 3412, and 7294. This is a highly profitable situation for the company to avail opportunity of. The tax rate is 40%, the discount rate for the company is 9% and the constant exchange rate is 2.8%. The projected cost is 12000, which is calculated on the constant exchange rate. This net present value of the project is the actual value of the project.

Years	0	1	2	3	4	5
Project Cost	-12000
EBIT		457	946	1,496	2,115	2,633
NOPAT		274	568	898	1269	1580
Add: Depreciation		2,143	2,143	2,143	2,143	2,143
Free Cash Flows		2417	2711	3041	3412	3722
Salvage Value						3571
Net Cash Flows	-12000	2417	2711	3041	3412	7294
Discounted Cash Flows	-12000	2218	2281	2348	2417	4740
NPV	2004
IRR	14%

Recommendation

It is highly recommended that the firm should approve the loan request in this first offshore project as its cash flows are favorable in 5 projected years. The NPV of the project is also favorable in current and future years as well, because the Brazilian economy is growing. The loan, which the firm has to pay on 0.5%, is also less than the competitors’. The overall project is viable to invest as it will meet the obligations, which include the operating activities as well as other activities.....................................

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