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

question 48

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 200,000 euros after one year. If the one-year forward exchange rate is $1.40/euro and the dollar cost of capital is 9%, what is the present value (PV) of the project cash flows?

• A) $232,981
• B) $245,198
• C) $256,881
• D) $268,880

---

Definitions:

Metacognitive Skills

Skills which enable an individual to understand, control, and manipulate their own cognitive processes.

Imaginary Audience

An individual’s mistaken assumption that others are as intrigued by and concerned about him as he is. A characteristic feature of adolescents’ self-focuses.

Improved Metacognitive Skill

Enhanced ability to understand, control, and manipulate one's own cognitive processes, such as learning and problem-solving.

Rumination Coping Style

A maladaptive coping mechanism characterized by continuously thinking about the causes, situational factors, and consequences of one’s negative emotional experience.