You Are Analyzing a Project with an Initial Cost of £80,000

question 68

Multiple Choice

You are analyzing a project with an initial cost of £80,000. The project is expected to return £10,000 the first year,£40,000 the second year and £50,000 the third and final year. The current spot rate is £.56. The nominal risk-free return is 5 percent in the U.K. and 7 percent in the U.S. The return relevant to the project is 8 percent in the U.K. and 9.25 percent in the U.S. Assume that uncovered interest rate parity exists. What is the net present value of this project in U.S. dollars?

• A) $7,787
• B) $8,002
• C) $8,312
• D) $8,511
• E) $8,885

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Definitions:

Social Speedup

The phenomenon where the pace of social life, including work, communication, and leisure activities, increases due to technological advancements and societal expectations.

Religious Organization

An institution that facilitates the practice of religious beliefs and rituals, and often plays a role in community cohesion and social support.

Sects

Religious groups that break away from established denominations, often characterized by their rejection of mainstream beliefs.

Churches

Religious organizations that are established and recognized within a community, offering services of worship and spiritual guidance.