You Are Considering a Project in India Which Has an Initial

question 1

Multiple Choice

You are considering a project in India which has an initial cost of 250,000RS.The project is expected to return a one-time payment of 400,000RS five years from now.The risk-free rate of return is 3 percent in the U.S.and 4 percent in India.The inflation rate is 2 percent in the U.S.and 5 percent in India.Currently,you can buy 5,500RS for $100.How much will the payment five years from now be worth in U.S.dollars?

• A)$6,920
• B)$2,060
• C)$7,201
• D)$3,048
• E)$6,515

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Definitions:

Maximize

To increase to the greatest possible amount or degree, often used in the context of optimizing outcomes such as profit, efficiency, or utility in various fields.

Total Fixed Cost

The total of all costs that do not change with the level of production or sales activities within a company.

Purely Competitive Market

A market structure characterized by many buyers and sellers, no barriers to entry, and a homogeneous product, leading to the firms being price takers.

Total Cost

The complete amount of costs incurred by a business in the production of goods or services, including both fixed and variable costs.