Luther Industries,a Canadian Firm,is Considering an Investment in Japan

question 5

Multiple Choice

Luther Industries,a Canadian firm,is considering an investment in Japan.The dollar cost of equity for Luther is 12%.The risk-free interest rates on dollars and yen are r_$ = 5.5% and r_¥ = 1.5% respectively.Luther Industries is willing to assume that capital markets are internationally integrated.Luther Industries needs to know the comparable cost of equity in Japanese yen for a project with free cash flows that are uncorrelated with spot exchange rates.The yen cost of equity for Luther Industries is closest to:

• A) 14.0%
• B) 12.3%
• C) 7.8%
• D) 18.5%

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Definitions:

Communication Transmissions

This term appears to be a variation on the concept of communication channels or processes which involve the sending and receiving of messages between individuals or groups.

Ethnocentrism

The belief in the inherent superiority of one's own ethnic group or culture, often accompanied by a disregard for other groups.

Cross-Cultural Communication

The process of exchanging information and ideas between individuals from different cultural backgrounds, emphasizing understanding and reducing miscommunication.

Gestures

Physical movements made by parts of the body, especially the hands, to express thoughts, emotions, or convey messages.