Please answer this question, show your work. Underline and bold the answer so that I know which is the final answer.
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Q1: You have an investment opportunity in Japan. It requires an investment of $1.05 million today and will produce a cash flow of ¥109 million in one year with no risk. Suppose the risk-free interest rate in the United states is 4.5%, the risk-free interest rate in Japan is 1.6%, and the current competitive exchange rate is ¥110 per dollar.
– What is the NPV of this investment?
– Is it a good opportunity?
NOTE: I have more similar finance questions to answer (about 20 more). Please let me know if interested answering the rest.