You Have an Investment Opportunity in Germany That Requires an Investment

question 25

Multiple Choice

You have an investment opportunity in Germany that requires an investment of $250,000 today and will produce a cash flow of €208,650 in one year with no risk.Suppose the risk-free rate of interest in Germany is 6% and the current competitive exchange rate is €0.78 to $1.00.What is the NPV of this project? Would you take the project?

• A)NPV = 0;No
• B)NPV = -$2358;No
• C)NPV = $2358;Yes
• D)NPV = $13,650;Yes

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Definitions:

Autoclave

A pressurized device used to sterilize equipment and supplies by subjecting them to high temperature steam for a period of time.

Sterilization

The process of making something free from bacteria or other living microorganisms.

Infested Clothing

Garments that have been overrun or inhabited by pests, such as lice or bedbugs.

Fecal-Contaminated

Describing something that has been polluted or tainted with fecal matter.