A Canadian Project Has an Initial Cost of Can$1

question 78

Multiple Choice

A Canadian project has an initial cost of Can$1.8 million and is expected to produce cash inflows of Can$710,000 a year for 3 years after which time it will be worthless.Assume the expected inflation rate in Canada is 4 percent while it is only 3 percent in the U.S.The applicable interest rate in Canada is 8 percent.Assume the current spot rate is C$1 = $.78.What is the net present value of this project in Canadian dollars using the foreign currency approach?

• A)Can$33,974.02
• B)Can$32,790.05
• C)Can$29,738.86
• D)Can$28,721.40
• E)Can$30,751.18

---

Definitions:

PR Professionals

Individuals who specialize in public relations, focusing on creating and maintaining a positive public image for organizations or individuals.

Visual Bulletin Boards

Physical or digital boards used to display information or messages visually, often incorporating images, notices, and announcements.

Pinterest

An internet service that allows users to pin and categorize images and ideas on virtual boards for personal or public viewing.

Live Video Streaming

Real-time broadcasting of video content over the internet, allowing viewers to watch events unfold live.