You Are Analyzing a Project with an Initial Cost Of \le

question 19

Multiple Choice

You are analyzing a project with an initial cost of $\le$ 45,000. The project is expected to return $\le$ 8,000 the first year, $\le$ 22,000 the second year and $\le$ 20,000 the third and final year. The current spot rate is $\le$ .57. The nominal risk-free return is 5.5 % in the U.K. and 4.5 % in Canada. The return relevant to the project is 9 % in the U.K. and 10.5 % in Canada. Assume that uncovered interest rate parity exists. What is the net present value of this project in Canadian dollars?

• A) -$10,144
• B) $1,206
• C) $11,418
• D) $13,711
• E) $16,009

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