One of the important components of multinational capital budgeting is to analyze the cash flows generated from subsidiary companies.

Consider this case:

Sacramone Products Co. is a U.S.-based firm evaluating a project in Mexico.

You have the following information about the project:

	The project requires a 150,000 peso investment today and is expected to generate cash flows of 60,000 pesos at the end of the next three years.
	The current U.S. exchange rate with the Mexican peso is 11.876 pesos per U.S. dollar, and the exchange rate is expected to remain constant.
	The firms WACC is 10%, and the project is of average risk.

What is the dollar-denominated net present value (NPV) of this project?

-$73.06

-$79.70

-$59.78

-$66.42

There are three major types of international credit markets. Read the following statement and then indicate which type of international credit market is being described.

Gayawage Corp. took out a 10-year floating-rate bank loan with an interest rate tied to LIBOR to finance a multinational project.

Eurocredit

Foreign bond

Eurobond