International Pooch is headquartered in Canada, but is considering the construction of a plant in
Japan. If they use the foreign currency approach to calculating the NPV, they will:[LINE][LINE]1)
Convert all yen cash ﬂows into dollars;[LINE]2) Discount the dollar cash ﬂows at the ﬁrm's required
return for dollar denominated cash ﬂows;[LINE]3) Compute the NPV in yen.

Question

Quizplus · Accepted Answer

If they use the foreign currency approach, they should convert all cash flows into the foreign currency (yen) and discount them at the required return for yen-denominated cash flows. The NPV should then be computed in yen.

International Pooch Is Headquartered in Canada, but Is Considering the Construction