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I want to to know what the relevant cost would be, for at least yr 2 ,for an investment appraisal in the following aspect of the question:
In a foreign direct investment strategy a UK company,Partsea,will have to import components from another of Partsea’s subsidiaries in Bottoniland to the target country of Hotternia,from year 2 onwards at a fixed price of 5 Bottoniland tala(Bt) per unit. 25% of this price represents profit element to the Bottoniland company. Sales units will be 1m units in yr 1 but 2.5m units per year for the remainder of the planning horizon.
Inflation Exchange Rates
Yr UK Hotternia Bottoniland $H/E Bt/E $H/Bt
spot 15.8 4.2 3.76
1 2% 10% 5% 17.04 4.32 3.94
2 3% 8% 5% 17.87 4.41 4.05
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