Say That the Current Direct Exchange Rate Is $1

question 22

Multiple Choice

Say that the current direct exchange rate is $1.3382/£.The cash inflow in pounds is £75,000 in two years and the discount rate is 5%.During this time,the anticipated annual inflation rate is 2% per year in the United States and 5% per year in the United Kingdom.What is the present value (in U.S.dollars) of the £75,000 after conversion from pounds to dollars if you are using current and forward exchange rates?

• A)$94,711.79
• B)$90,201.70
• C)$85,906.38
• D)$81,815.60

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Definitions:

Networking Potential

The capability of an individual or organization to develop and maintain a network of business contacts, which can be leveraged for opportunities and growth.

Learning Potential

The capacity or ability of an individual or organization to gain knowledge or skills.

Core Business Potential

The inherent capacity of a company's primary area of operation to generate revenue and achieve sustainable growth.

Cross-Selling Potential

The ability of a company to sell additional products or services to an existing customer base.