Econ assignment

RETURNS ANALYSIS FOR FOREIGN DIRECT INVESTMENT

WITH VARYING EXPORTS (EU AND SA PROJECTS)

Sales Financing Function (Bamboo Foresting Company)

EU SFEU = 11.0 + 124 (ExpEU – 1.55%)

where SFEU is sales revenue (in millions) for the Bamboo Foresting Company EU Division and ExpEU is the growth in U.S. exports to EU countries.

SA SFSA = 12.0 + 102 (ExpSA – 0.50%)

where SFSA is sales revenue (in millions) for the Bamboo Foresting Company South America (SA) Division and ExpSA is the growth in U.S. exports to South American countries

Time Value of Money EU 6.2% SA 4.5%

US Export Growth for EU (ExpEU) by Year:

2019 2020 2021 2022

View 1 3.65% 1.50% 2.00% 3.50%

View 2 -3.50% 2.00% 3.00% 1.30%

View 3 1.50% 1.50% 1.50% 1.50%

US Export Growth (ExpSA) for SA:

2019 2020 2021 2022

View 1 9.35% -2.40% -1.56% 3.67%

View 2 -7.67% 3.30% 4.50% 2.36%

View 3 2.50% 2.50% 2.50% 2.50%

Building and Maintenance Costs (in millions)

2019 2020 2021 2022

EU $15.00 $3.00 $1.75 $1.75

SA $12.00 $2.50 $3.00 $4.00

Uncertainty: Likelihood of Views

View 1 View 2 View 3

EU 30% 50% 20%

SA 45% 35% 20%