Use the Information for the Question(s)below

question 10

Multiple Choice

Use the information for the question(s) below.
You are a Canadian investor who is trying to calculate the present value (PV) of £5 million cash inflow that will occur one year in the future.The spot exchange rate is S = 1.8839 CAD/GBP and the forward rate is F₁ = 1.8862 CAD/GBP.The appropriate dollar discount rate for this cash flow is 5.32% and the appropriate GBP discount rate is 5.24%.
-The present value (PV) of the £5 million cash inflow computed by first discounting the pounds and then converting into dollars is closest to:

• A)$8,961,420
• B)$8,950,495
• C)$8,954,615
• D)$8,943,695
• E)$9,004,167

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