If a foreign project has a positive NPV but NPV
is greater from the parent’s than from the project perspective, then the parent
Accept the project and decide whether to hedge
currency risk based on the firm’s risk of policies
Accept the project and hedge the foreign
currency cash flows
Accept the project and hire a local consultant
to value the expected future cash flow capital
Reject the project and continue to look for
higher- NPV projects
Victor’s Secret plans to sell $10 million
accounts receivable due in one year to Union Bank of Switzerland. UBS charges a
fee of 2 percent for purchasing the receivables and is willing to buy the
receivables at a discount rate of 4 percent compounded quarterly. What is the
all-in cost of the receivables?
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