A Financial Manager Has Determined That the Appropriate Discount Rate

question 84

Multiple Choice

A financial manager has determined that the appropriate discount rate for a foreign project is 15 percent. However, that discount rate applies in the United States using dollars. What discount rate should be used in the foreign country using the foreign currency? The inflation rates in the United States and in the foreign country are expected to be 8 percent and 4 percent, respectively.

• A) 11 percent
• B) 19 percent
• C) 21 percent
• D) 12 percent

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Definitions:

Balance Sheet

A financial statement that reports a company's assets, liabilities, and shareholder equity at a specific point in time.

Balance Sheet Columns

The sections of a balance sheet which typically include assets, liabilities, and shareholders' equity.

Drawing Account

An account used to record withdrawals made by a business owner or partner from the company for personal use.

Balance Sheet Debit

An entry on the left side of a balance sheet, typically indicating an increase in assets or a decrease in liabilities or equity.