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THE NEXT TWO QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION Which of the following is correct? a . NPV from project's perspective is positive and
THE NEXT TWO QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION
Which of the following is correct?
a NPV from project's perspective is positive and NPV from parent firm's perspective is positive.
b NPV from project's perspective is positive and NPV from parent firm's perspective is negative.
c NPV from project's perspective is negative and NPV from parent firm's perspective is positive.
d NPV from project's perspective is negative and NPV from parent firm's perspective is negative.
Which of the following would be correct?
a The firm is using the project to engage in currency speculation.
b The firm does not need to hedge the project's expected cash flows from foreign exchange rate risk.
c The firm does need to hedge the project's expected cash flows from foreign exchange rate risk.
d The firm should simply reject the project. It is value destroying.
e The firm should sell the project to a local investor today, to capture the NPV
f None of the options in this question.
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