The Foreign Currency Approach to Capital Budgeting Analysis

question 17

Multiple Choice

The foreign currency approach to capital budgeting analysis:

• A) produces different results than the home currency approach.
• B) is computationally harder to use than the home currency approach.
• C) computes the NPV of a project in both the foreign and the domestic currency.
• D) requires an exchange rate for each time period for which there is a cash flow.
• E) converts all foreign cash flows into dollar cash flows.

---

Definitions:

Activity Duration

the total time required to complete a specific activity or task in the process of project management or planning.

Beta Distribution

A statistical distribution representing probabilities of outcomes across a range of 0 to 1, often used in Bayesian statistics for estimating unknown parameters.

PERT Analysis

A project management tool used to schedule, organize, and coordinate tasks within a project, which stands for Program Evaluation and Review Technique.

Expected Activity Times

Predicted durations for tasks or activities within a project, often based on historical data and used in planning and scheduling.