12 million and expected cash inflows of £400,000, £500,000, and £600,000 for Years 1 to 3, respectively. Assume th current spot rate is £.73 and the nominal risk-free returns are 4 percent in the U.K. and 3 percent in the U.S. If uncovered interest rate parity exists, w the net present value of this project in U.S. dollars using the home currency approach? Assume the project's U.S. discount rate is 12 percent Multiple Choice O-$56.359 -$104,040

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Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.