-Refer to Exhibit T13

question 30

Multiple Choice

-Refer to Exhibit T13.1. Suppose that beginning in year 1, there is a 10% chance each year the host government will seize the project's assets. If the assets are not seized, you expect to receive the cash flows as stated above. If the assets are seized in a particular year, you expect to receive no repatriated funds thereafter. Assuming international parity conditions hold, S0£/€ = £2/€, i^€ = 5%, and i^£ = 7%, what is the NPV in pounds?

• A) £42,431.49
• B) £47,018.46
• C) £47,368.32
• D) £49.652.21
• E) £50,737.29

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Definitions:

Trust Fund

A legal entity created to hold assets for the benefit of a particular person, group, or organization, managed by a trustee.

Rate Of Return

A measure of the profit or loss of an investment over a given period, typically expressed as a percentage of the investment's initial cost.

Average Rate Of Return

The mean annual growth rate of an investment over a specified period of time, expressed as a percentage.

Excess Funds

Resources or capital that exceed the immediate operational or investment needs of an entity.