If an Exporter to the US Expects the AUD to Depreciate

question 51

True/False

If an exporter to the US expects the AUD to depreciate, she will buy the USD forward.

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Definitions:

Cash Flows

The total sum of cash and cash-like assets moving into and out of a company.

Payback Method

An investment appraisal technique that calculates the time required to recover the initial investment from the cash inflows generated by the investment.

Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows.

Cost Recovery

The process of recuperating the expenses incurred on an asset through depreciation deductions or when the asset is sold.