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.