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You Have an Investment Opportunity in Germany That Requires an Investment

Question 25

Multiple Choice

You have an investment opportunity in Germany that requires an investment of $250,000 today and will produce a cash flow of €208,650 in one year with no risk.Suppose the risk-free rate of interest in Germany is 6% and the current competitive exchange rate is €0.78 to $1.00.What is the NPV of this project? Would you take the project?


A) NPV = 0;No
B) NPV = -$2358;No
C) NPV = $2358;Yes
D) NPV = $13,650;Yes

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