International Business Finance Evaluation
The initials investment evaluation
Academically, preferable method of evaluating investment project is net present values method1, thus bank in Hong Kong required our project must show a positive net present value after five years.
The net present value of both Singapore and Indonesia 5-years project are positive. (SEE APPENDIX)Based on calculation, it is worth to invest in both Singapore and Indonesia, but NPV are relatively small compared to the original investment (HK$ 0.178 million in Singapore &1.14million in Indonesia).
There are some limitations of net present value calculation. The project only is evaluated over 5 years. A longer period may show the project in a completely different light, and would be more realistic for a project of this nature. The first 5 years cash flow is generated under estimation. How confident are we of their accuracy? Just little bit changes in cash flow; all results calculated will be differenced.
Also, the future spot rates where......
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