You Want to Invest in a Project in Canada

question 3

Multiple Choice

You want to invest in a project in Canada. The project has an initial cost of C$1.6 million and is expected to produce cash inflows of C$750,000 a year for 3 years. The project will be worthless
After the first 3 years. The expected inflation rate in Canada is 5 percent while it is only 3.5 percent
In the U.S. The applicable interest rate for the project in Canada is 12 percent. The current spot rate
Is C$1 = $0.8637. What is the net present value of this project in Canadian dollars using the foreign
Currency approach?

• A) C$187,924
• B) C$201,373
• C) C$246,460
• D) C$265,139
• E) C$267,528

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Definitions:

Behavioral Confirmation

A social psychological phenomenon where an individual's behavior aligns with the expectations of others, thus confirming those expectations.

Systematic Pattern

An arrangement or sequence of actions, behaviors, or occurrences that follow a predictable and organized structure.

Oppression

The unjust treatment or control of people by others, often through systemic inequalities and abuse of power.

Social Dominance

A societal structure where certain groups maintain superior power and privileges over others based on hierarchy and inequality.