A US-Based Firm Is Planning to Make an Investment in Europe

question 15

Multiple Choice

A U.S.-based firm is planning to make an investment in Europe. The firm estimates that the project will generate cash flows of 100,000 euros after one year. If the one-year forward exchange rate is $1.50/euro and the dollar cost of capital is 8%, what is the present value (PV) of the project cash flows?

• A) $132,675
• B) $145,349
• C) $137,287
• D) $138,889

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Definitions:

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A technology that uses radio waves to identify and track objects, animals, or people automatically.

NFC (Near Field Communication)

A set of communication protocols that enable two electronic devices, one of which is usually a portable device such as a smartphone, to establish communication by bringing them within close proximity.

VR (Virtual Reality)

A simulated experience that can be similar to or completely different from the real world, often using specialized equipment like headsets for immersive interaction.

Cruising Experience

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