You Have an Investment Opportunity in Germany That Requires an Investment

question 25

Multiple Choice

You have an investment opportunity in Germany that requires an investment of $250,000 today and will produce a cash flow of €208,650 in one year with no risk.Suppose the risk-free rate of interest in Germany is 6% and the current competitive exchange rate is €0.78 to $1.00.What is the NPV of this project? Would you take the project?

• A)NPV = 0;No
• B)NPV = -$2358;No
• C)NPV = $2358;Yes
• D)NPV = $13,650;Yes

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Definitions:

Process Manufacturing

A production method that involves converting raw materials into finished goods through chemical, biological, or physical transformations, used in industries like chemicals, food, and pharmaceuticals.