Investment decisions Carpet Baggers, Inc., is proposing to construct a new bagging plant in a country in Europe. The two prime candidates are Germany and Switzerland. The forecasted cash flows from...

Investment decisions Carpet Baggers, Inc., is proposing to construct a new bagging plant in a country in Europe. The two prime candidates are Germany and Switzerland. The forecasted cash flows from the proposed plants are as follows: C0 C1 C2 C3 C4 C5 C6 IRR (%) Germany (millions of euros) −60 +10 +15 +15 +20 +20 +20 15.0 Switzerland (millions of Swiss francs) −120 +20 +30 +30 +35 +35 +35 10.7 ❱ TABLE 27.5 Interest rates and exchange rates. a Number of units of foreign currency that can be exchanged for $1. Interest Rate (%) Spot Exchange Ratea 1-Year Forward Exchange Ratea United States (dollar) 3 — — Costaguana (pulga) 23 10,000 11,942 Westonia (ruple) 5 2.6 2.65 Gloccamorra (pint) 8 17.1 18.2 Anglosaxophonia (wasp) 4.1 2.3 2.28 The spot exchange rate for euros is $1.3/€, while the rate for Swiss francs is SFr 1.5/$. The interest rate is 5% in the United States, 4% in Switzerland, and 6% in the euro countries. The financial manager has suggested that, if the cash flows were stated in dollars, a return in excess of 10% would be acceptable. Should the company go ahead with either project? If it must choose between them, which should it take?