A Canadian Firm Acquires a British Firm That Will Generate

question 109

Multiple Choice

A Canadian firm acquires a British firm that will generate cash flows of 10,000 pounds next year and these cash flows will grow at 6% a year.If the British WACC is 9% and the spot exchange rate is 1.9 CAD/GBP,what is the present value (PV) of the cash flows from this acquisition to domestic shareholders?

• A)$633,333
• B)$654,876
• C)$691,543
• D)$716,289
• E)$677,914