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

question 185

Multiple Choice

You are analyzing a project with an initial cost of $\le$ 80,000. The project is expected to return $\le$ 10,000 the first year, $\le$ 40,000 the second year and $\le$ 50,000 the third and final year. The current spot rate is $\le$ .56. The nominal risk-free return is 5 % in the U.K. and 7 % in Canada. The return relevant to the project is 8 % in the U.K. and 9.25 % in Canada. Assume that uncovered interest rate parity exists. What is the net present value of this project in dollars?

• A) $7,787
• B) $8,002
• C) $8,312
• D) $8,511
• E) $8,885

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