A Canadian Firm Acquires a British Firm That Will Generate

question 52

Multiple Choice

A Canadian firm acquires a British firm that will generate cash flows of 30,000 pounds next year and these cash flows will grow at 3% a year.If the British WACC is 9% and the spot exchange rate is 1.7 CAD/GBP,what is the present value (PV) of the cash flows from this acquisition to domestic shareholders?

• A)$820,000
• B)$850,000
• C)$870,000
• D)$890,000
• E)$910,000

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Definitions:

23rd Pair

Refers to the pair of chromosomes that determine the biological sex of an individual in humans, commonly known as the sex chromosomes (XX for females and XY for males).

Base Pairs

The pairs of nitrogenous bases (adenine with thymine, and guanine with cytosine) that connect the two strands of a DNA molecule.

Genes

Units of heredity made up of DNA, responsible for guiding the process of creating the proteins that make up physical structures and regulate bodily functions.

Sperm and Ovum

The male and female gametes, respectively, whose union during fertilization results in the formation of a zygote, leading to pregnancy.