You Can Value Overseas Investments Using the NPV of the Cash

question 29

Multiple Choice

You can value overseas investments using the NPV of the cash flows.Which of the following adjustment is necessary to calculate the NPV?

• A) Adjust the cost of capital by the forward exchange rate and then discount the foreign cash flows
• B) Convert the foreign cash flows into domestic currency and use the domestic opportunity cost of capital for discounting
• C) Use the domestic discount rate to discount the foreign cash flows
• D) Convert the foreign cash flow into domestic currency and use the foreign cost of capital for discounting

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Definitions:

Project Constraints

Factors that limit the options for managing a project, including time, budget, resources, and scope.

Project Assumptions

Initial beliefs or predictions made about various aspects of a project, which are treated as true for the purposes of planning and execution.

Project Exclusions

Statements that define what is specifically not included in the project scope, helping to manage stakeholders' expectations.

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