Use the Table for the Question(s)below

question 26

Multiple Choice

Use the table for the question(s) below.
Consider the following two projects:

-The net present value (NPV) for project alpha is closest to:

• A)$20.96
• B)$16.92
• C)$24.01
• D)$14.41
• E)$12.06

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Definitions:

Real Exchange Rate

The rate at which two currencies can be exchanged after adjusting for inflation differences.

Purchasing-Power Parity

An economic theory stating that in the absence of transaction costs and with efficient markets, equivalent goods should have the same price when converted into a common currency.

Purchasing-Power Parity

A theory which posits that currencies are in equilibrium in terms of exchange rates when the purchasing power in both countries is identical.

Gold

A yellow precious metal valued for its rarity, durability, and use in jewelry, electronics, and as a form of currency.