You Want to Invest in a Riskless Project in Sweden

question 32

Multiple Choice

You want to invest in a riskless project in Sweden. The project has an initial cost of SKr3.86 million and is expected to produce cash inflows of SKr1.76 million a year for three years. The project will be worthless after three years. The expected inflation rate in Sweden is 3.2 percent while it is 2.8 percent in the U.S. A risk-free security is paying 4.1 percent in the U.S. The current spot rate is SKr7.7274. What is the net present value of this project in Swedish krona if the international Fisher effect applies?

• A) SKr1,087,561
• B) SKr701,458
• C) SKr823,333
• D) SKr958,029
• E) SKr978,177

---

Definitions:

Legal Bases

The foundational laws, regulations, or principles upon which legal actions or decisions are grounded.

Audience Concerns

The questions, needs, or issues that are important to the audience or stakeholders, which should be addressed by the speaker or writer.

Quality Information

Data or facts that are accurate, reliable, and relevant, providing value to those who use it.

Inner Critic

The internal voice that judges and criticizes one's own actions or thoughts, often negatively impacting self-esteem and creativity.