1) An MNC is considering the investment opportunity in Egypt. Cost of project is EGP 51,646,125. Project has no cash flows in year 1, and then promises annual cash flows of EGP 21,000,000 for years 2, 3 and 4. Inflation rate is =7%, the inflation rate in Egypt is =10.44%, and business risk of investment would lead the unlevered firm to demand the return of Kud =iI=18% these rates are expected to succeed in future. Present exchange rate is S(EGP/INR)=0.1132. Determine the NPV in INR? Use the predicted exchange rate methodology.
2) Last year, you bought the stock at the price of $51.5 a share. Over course of the year, you got $2 in dividends and inflation averaged 2.7%. Today, you sold your shares for $54.2 a share. What is your estimated real rate of return on this investment (usually you would utilize "Fisher Effect Formula", but in this case please use "approximation formula"?