Consider Two Countries, Mondrain and Davenport That Are on the Gold

question 190

Multiple Choice

Consider two countries, Mondrain and Davenport that are on the gold standard exchange rate system.Suppose the exchange rate between monds (Mondrain's currency)
And divas (Davenport's currency)
Is 4 divas per mond and the price of gold in Mondrain is fixed at 60 monds per ounce of gold.What is the price of gold in Davenport?

• A)6.66 divas per ounce of gold
• B)15 divas per ounce of gold
• C)24 divas per ounce of gold
• D)240 divas per ounce of gold

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Definitions:

After-Tax Discount Rate

The discount rate used in capital budgeting that accounts for the effects of income tax.

Capital Budgeting

The process of evaluating and selecting long-term investments that are in line with the goal of a firm's shareholders' wealth maximization.

Straight-Line Depreciation

A way of assigning the cost of a tangible asset throughout its service life in even annual portions.

Cash Flow

The net amount of cash and cash-equivalents being transferred into and out of a business, used to assess the financial health of the entity.