A Financial Manager Has Determined That the Appropriate Discount Rate

question 84

Multiple Choice

A financial manager has determined that the appropriate discount rate for a foreign project is 15 percent. However, that discount rate applies in the United States using dollars. What discount rate should be used in the foreign country using the foreign currency? The inflation rates in the United States and in the foreign country are expected to be 8 percent and 4 percent, respectively.

• A) 11 percent
• B) 19 percent
• C) 21 percent
• D) 12 percent

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Definitions:

Syllogism Validity

The logic of an argument's structure determining its correctness or faultiness based on premises leading to a conclusion.

Universal Premise

A statement in logic that asserts something is true for all members of a certain category or class.

Particular Premise

A statement in an argument that makes a claim about some, but not all, members of a category.

Venn Diagram

A diagram that represents mathematical or logical sets pictorially as circles or closed curves within an enclosing rectangle (the universal set), with common elements of the sets represented by intersections of the circles.