The spot exchange rate for the Thai bhat is 33.135 bhat to the dollar. The 1 year forward rate is 34.175. Ramo Corp. has undertaken a capital project in Bangkok that is expected to produce a cash flow of 17,087,500 bhat at the end of the first year
The company will discount cash flows at a rate of 14%. What is the present value of the first year cash flow in U.S. dollars.
A) $14,989,035
B) $500,000
C) $438,596
D) $452,363
Answer: C
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