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

question 13

Multiple Choice

Petrus Co. 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 A$2,000,000 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 percent. 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

---

Definitions:

Useful Output

The amount of productive work, goods, or services an organization, process, or device generates during a given period.

Sales Journal

A special journal that records all sales of merchandise on account.

General Ledger

The primary accounting record of a company that uses double-entry bookkeeping, containing all the financial accounts and transactions.

Reference Column

An additional column in financial documents used to include explanatory notes or cross-references.