You are evaluating a project and are trying to determine the cash flows in dollars your firm needs to receive in five years to accept the project. The necessary information is:
If you accept the project, your firm will receive 10 million Indian Rupee in 5 years, lump sum guaranteed
Spot rate for Indian Rupee is $0.06
Annualized interest rate in United States for 5 year period is 5 percent
Annualized interest rate in Thailand for 5 year period is 17 percent.
Interest parity exists
Plan is to hedge cash flows with a forward contract.
What is the dollar amount of cash flows that firm will receive in five years if it accepts this project?