Petrus Company Has a Unique Opportunity to Invest in a Two-Year

question 7

Multiple Choice

Petrus Company has a unique opportunity to invest in a two-year project in Australia.The project is expected to generate 1,000,000 Australian dollars (A$) in the first year and 2,000,000 Australian dollars in the second.Petrus would have to invest $1,500,000 in the project.Petrus has determined that the cost of capital for similar projects is 14%.What is the net present value of this project if the spot rate of the Australian dollar for the two years is forecasted to be $.55 and $.60,respectively

• A) $2,905,817.
• B) -$94,183.
• C) $916,128.
• D) none of the above

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Definitions:

Environment

The surroundings or conditions in which a person, animal, or plant lives or operates.

Imprinting

A form of learning in which an animal gains its sense of species identification and behavior in a very brief period after birth or hatching.

Conservation

Within the realm of cognitive development, the realization that specific attributes of objects are constant, even when their shape or look alters.

Accommodation

The process of adapting cognitive schemas to incorporate new information.