You Are Expecting a Payment of €630,000 Three Years from Now.The

question 12

Multiple Choice

You are expecting a payment of €630,000 three years from now.The risk-free rate of return is 3.4 percent in the United States and 2.9 percent in Euroland.The inflation rate is 2.5 percent in the United States and 2.1 percent in Euroland.Assume you can currently buy €82 for $100.How much will the payment 3 years from now be worth in U.S.dollars?

• A)$808,288
• B)$779,933
• C)$819,949
• D)$671,321
• E)$684,169

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Definitions:

Europe

A continent located entirely in the Northern Hemisphere and mostly in the Eastern Hemisphere, known for its rich history, cultural diversity, and economic influence.

North America

A continent entirely within the Northern Hemisphere and almost entirely within the Western Hemisphere; it includes countries like the United States and Canada.

Thomas Robert Malthus

An English cleric and scholar, influential in the fields of political economy and demography, known for his theory that population growth would eventually outpace food production.

Karl Marx

A 19th-century philosopher, economist, and socialist whose works in economics laid the foundation for the understanding of labor and its relation to capital.