Use the Information for the Question(s)below

question 69

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 a 15 million British pound cash inflow that will occur one year from now.The spot exchange rate is 1.5742 CAD/GBP and the forward rate is F₁ = 1.5682 CAD/GBP.The appropriate dollar discount rate for this cash flow is 1.05% and the appropriate British pound discount rate is 1.45%.
-What is the present value of the dollar cash inflow computed by first converting the pounds into dollars and then discounting the dollars?

• A)$23,275,505
• B)$23,186,792
• C)$23,367,640
• D)$23,278,575
• E)$23,310,005

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Definitions:

U.S. Tax Structure

The system of taxation in the United States, comprising various types of taxes such as income, corporate, sales, and payroll taxes.

Property Taxes

Taxes levied on property owners by local governments based on the assessed value of their property, including land and buildings.

Laissez-Faire

A philosophy advocating minimal governmental intervention in the economy.

Economic Policy

This encompasses decisions by a government regarding its taxation, spending, and regulation practices to influence its country's economy.