Alcan,Incis Considering a Project That Has an Initial Outlay or Cost

question 47

Multiple Choice

Alcan,Inc.is considering a project that has an initial outlay or cost of $220,000.The respective future cash inflows from its four-year project for years 1 through 4 are: $50,000,$60,000,$70,000,and $80,000,respectively.Alcan uses the internal rate of return method to evaluate projects.Will Alcan accept the project if its hurdle rate is 12%?

• A)Alcan will not accept this project because its IRR is about 9.74%.
• B)Alcan will not accept this project because its IRR is about 7.63%.
• C)Alcan will not accept this project because its IRR is about 6.50%.
• D)Alcan will not accept this project because its IRR is about 4.66%.

Calculate the exchange gain or loss arising from the translation of foreign operations' financial statements.

Recognize the criteria for determining a subsidiary’s functional currency.

Differentiate between the presentation currency translation (PCT) method and the functional currency translation (FCT) method.

Understand how dividends are translated in foreign currency operations.

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Definitions:

Failure Rate

Measures the frequency at which an engineered system or component fails, expressed in failures per unit of time.

Graduation

The act of completing a course of study at an educational institution, usually marked by a ceremony to recognize academic achievement.

Small Businesses

Businesses with limited revenue and number of employees, distinct from medium-sized and large enterprises.

Economy

The system of production, distribution, and consumption of goods and services within a specific geographical area.