At 31 December 20X1, Rambrune is testing a data centre located in the United Kingdom. Expected net cash flows, in pounds sterling: 66,000 units in 20X2, 72,600 units in 20X3 and 79,860 units in 20X4. The treasury department provides: a pre-tax rate appropriate for the pound of 10 %, a pre-tax rate appropriate for the euro of 7 %, a spot rate at 31 December 20X1 of 1 GBP = 1.15 units EUR and a forecast rate for 20X4 of 1 GBP = 1.1 units EUR. Calculate value in use in pounds, then in euros.
- Net cash flow for 20X2 (GBP)
- 66,000
- Net cash flow for 20X3 (GBP)
- 72,600
- Net cash flow for 20X4 (GBP)
- 79,860
- Pre-tax rate specific to the pound
- 10 %
- Pre-tax rate specific to the euro
- 7 %
- Spot rate at 31 December 20X1 (EUR per 1 GBP)
- 1.15
- Forecast rate for 20X4 (EUR per 1 GBP)
- 1.1