question archive A Canadian project has an initial cost of Can$1
A Canadian project has an initial cost of Can$1
Subject:AccountingPrice: Bought3
A Canadian project has an initial cost of Can$1.8 million and is expected to produce cash inflows of Can$710,000 a year for 3 years after which time it will be worthless. The expected inflation rate in Canada is 4 percent while it is only 3 percent in the U.S. The applicable interest rate in Canada is 8 percent. The current spot rate is C$1 = $.78. What is the net present value of this project in Canadian dollars using the foreign currency approach?
