When a Currency Depreciates, the Prices of Its Imports from Other

question 378

Multiple Choice

When a currency depreciates, the prices of its imports from other countries will:

• A) increase.
• B) decrease.
• C) remain constant.
• D) fluctuate randomly.

---

Definitions:

Payback Period

The payback period is the length of time required to recover the cost of an investment, calculated by dividing the initial investment by the annual cash inflow.

Discounted Payback

A capital budgeting method that calculates the time needed to recoup investment costs, taking the time value of money into account.

Positive Cash Flows

The situation where a company's cash inflows exceed its cash outflows, indicating financial strength and the ability to finance operations, debt, and investments.

NPV

Net Present Value, a method used in capital budgeting to assess the profitability of an investment or project, calculating the difference between the present value of cash inflows and outflows.