The Foreign Currency Approach to Capital Budgeting Analysis

question 37

Multiple Choice

The foreign currency approach to capital budgeting analysis:
I.is computationally easier to use than the home currency approach.
II.produces the same results as the home currency approach.
III.requires an exchange rate for each time period for which there is a cash flow.
IV.computes the NPV of a project in both the foreign and the domestic currency.

• A)I and III only
• B)II and IV only
• C)I, II, and IV only
• D)II, III, and IV only
• E)I, II, III, and IV

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