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Dear Sir,
In the answer part, there is a calculation of the ‘project cash flows’ and then a separate calculation of ‘cash flows’. I do not understand the relationship between these two calculations and why each o them is needed. Can you please help?
Also, the ‘cash flows’ calculation a total investment cost of 80,7 milEUR is used. Where does this come from?
Many thanks in advance for the clarifications.
The project cash flows are the cash flows in Canvia and are in CL’s.
Given that is Colvin that is making the decision as to whether or not to invest, the cash flows that follows are the cash flows for Colvin, which means converting the CL’s to €’s, and it is the € cash flows that are discounted.
The 80.7M is the 800 CL converted at an exchange rate of 9.91.
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