Use the Following Information to Answer the Question(s) Below

question 20

Multiple Choice

Use the following information to answer the question(s) below.
Rearden Metal, a U.S. manufacturer, has made a purchase from d'Anconia Copper and is expecting a cash
outflow of 2 million ARS (Argentine Pesos) in six months. The currency spot rate is $0.2500/ARS and the
six-month forward rate is F6months = $0.2470/ARS. The appropriate annual discount rate for the
Argentine Peso is 6.5% and the annual discount rate for the U.S. dollar is 4%.
-The present value of Rearden Metal's cash outflow computed by first discounting the cash flow at the appropriate Argentine Peso rate and then converting to dollars is closest to:

• A)$469,500.
• B)$475,000.
• C)$481,000.
• D)$484,500.

---

Definitions:

Milgram

Refers to Stanley Milgram, a psychologist known for his experiments on obedience to authority figures, demonstrating people's willingness to follow orders from an authority figure that involved harming another person.

Obedience Experiments

Obedience experiments are psychological tests that study how people obey authority figures, even when asked to perform acts conflicting with their personal morality.

Authority

The power or right to give orders, make decisions, and enforce obedience.

Milgram

A psychologist known for his research on obedience, revealing how ordinary people can commit extraordinary acts under authority pressure.