An Australian Firm Is Evaluating a Proposal to Build a New

question 20

Multiple Choice

An Australian firm is evaluating a proposal to build a new plant in the United States. The expected cash flows in $US (in millions) are as follows: Year 0, −100; Year 1, 40; Year 2, 50; Year 3, 65. The discount rate in $A is 10 percent, while the discount rate in $US is 12 percent and the spot rate is $US0.85/$A. Calculate the NPV in $A.

• A)+25.69
• B)−21.84
• C)+13.10
• D)+21.84

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Definitions:

Royal Assent

The final approval of the representative of the British Crown by which a bill becomes law in Canada.

Human Rights Legislation

Laws and regulations designed to protect individuals from discrimination and ensure equal opportunities for all, regardless of race, religion, gender, or other characteristics.

Discrimination

Unfair or prejudicial treatment of individuals based on certain characteristics such as race, age, or gender.

Identifiable Minority Groups

Sections of a population distinguished by physical or cultural traits, who are fewer in number compared to the majority and possibly subject to differential treatment.