The Impact of Blocked Funds on the Net Present Value

question 32

Multiple Choice

The impact of blocked funds on the net present value of a foreign project will be greater if interest rates are ____ in the host country and there are ____ investment opportunities in the host country.​

• A) ​very high; limited
• B) ​very low; limited
• C) ​very low; numerous
• D) ​very high; numerous

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Definitions:

Direct Write-off Method

An accounting practice where uncollectible accounts receivable are written off directly against income at the time they are deemed irrecoverable.

Accounting Equation

Assets = Liabilities + Owner’s Equity.

Factoring

A financial transaction in which a business sells its accounts receivable to a third party at a discount to gain immediate cash.

Uncollectible Accounts

Accounts receivable that a business has been unable to collect and deems as unlikely to be paid.