You Want to Invest in a Project in Canada

question 80

Multiple Choice

You want to invest in a project in Canada.The project has an initial cost of C$2.2 million and is expected to produce cash inflows of C$900,000 a year for 3 years.The project will be worthless after the first 3 years.The expected inflation rate in Canada is 4 percent while it is only 3 percent in the U.S.The applicable interest rate for the project in Canada is 13 percent.The current spot rate is C$1 = $0.8158.What is the net present value of this project in Canadian dollars?

• A)-C$91,889
• B)-C$87,924
• C)-C$74,963
• D)C$165,139
• E)C$167,528