An Australian Firm Is Evaluating a Proposal to Build a New

question 39

Multiple Choice

An Australian firm is evaluating a proposal to build a new plant in the U.S.The expected cash flows in $US (in millions) are as follows: Year 0,-100; Year 1,40; Year 2,50; Year 3,65.The discount rate in $A is 10%,while the discount rate in $US is 12% and the spot rate is $US0.60/$A.Calculate the NPV of the project in $US.

• A)+36.40
• B)-21.84
• C)+13.10
• D)+21.84

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Definitions:

Federal Law

The body of law created by the federal government of a country, as opposed to state or local laws, which governs issues like commerce, taxation, and civil rights.

State Law

Legal regulations established and enforced by individual states within a country.

National Labor Relations Act

A foundational US law enacted in 1935 that protects the rights of employees and employers, encourages collective bargaining, and curtails certain private sector labor and management practices that can harm the general welfare.

Wagner Act

A foundational piece of labor legislation in the United States that protects the rights of workers to unionize and collectively bargain.