Which of the Following Would You Expect to Improve the Dollar-NPV

question 67

Multiple Choice

Which of the following would you expect to improve the Dollar-NPV of a foreign capital budgeting proposal?

• A)The Dollar is expected to appreciate against the foreign currency
• B)Lower inflation is expected in the foreign country than in the United States
• C)The foreign country has a less stable political environment
• D)The risk-free rate in the foreign country is higher than in the United States

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Definitions:

Actual Interest Rate

The real cost of borrowing money, including all fees and interest rates, more comprehensively represented than the nominal interest rate.

Discount Rate

The percent used for calculating a trade or cash discount. The interest percent charged by the buyer of a discounted note.

Actual Interest Rate

A rephrased term for the effective interest rate that takes into account the compounding period, fees, or other loan terms, providing a true cost of borrowing.

Actual Interest Rate

The actual rate of interest earned or paid on an investment, loan, or other financial product over a period, typically accounting for compounding.