You can value overseas investments using the NPV of the cash flows. Which of the following adjustment in necessary to calculate the NPV?

1. Adjust the cost of capital by the forward exchange rate and then discount the foreign cash flows. 2. Convert the foreign cash flows into domestic currency and use the domestic opportunity cost of capital for discounting. 3. Use the domestic discount rate to discount the foreign cash flows. 4. Convert the foreign cash flow into domestic currency and use the foreign cost of capital for discounting.