Which of the following would you expect to improve the Dollar-NPV of a foreign capital budgeting proposal?
A)The Dollar is expected to appreciate against the foreign currency
B)Lower inflation is expected in the foreign country than in the United States
C)The foreign country has a less stable political environment
D)The risk-free rate in the foreign country is higher than in the United States

Question

Quizplus · Accepted Answer

Lower inflation in the foreign country than in the United States would likely lead to a stronger foreign currency, improving the Dollar-NPV of the project when converting future cash flows back to dollars.

Which of the Following Would You Expect to Improve the Dollar-NPV