[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-390312-105":59,"doc-detail-390312-en":130},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":123,"head_meta":125,"extra_data":127,"updated_unix":129},105,"en","npv-calculation-foreign-currency-approach-practice-questions","NPV Calculation - Foreign Currency Approach - Practice Questions","","Foreign currency approach for computing Net Present Value (NPV) is covered through multiple exam-style practice questions. The material explains converting cash flows using spot exchange rates, adjusting discount rates when exchange rates are not given directly, and evaluating NPV under different assumptions for risk-free rates in two countries. Worked examples include Indian and U.S. or Latin America project evaluations, required rate of return determination, and questions on withholding tax impact and withholding-related NPV changes, plus an additional scenario involving volatile exchange rates and inflation differential.",{"@graph":69,"@context":122},[70,84,105],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":20,"@type":76,"position":81},"https://docshare.wps.com/document/exam/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/npv-calculation-foreign-currency-approach-practice-questions/390312/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/npv-calculation-foreign-currency-approach-practice-questions/390312.png","ImageObject",300,407,{"name":92,"@type":93},"Bulrr","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-21","2026-09-25",true,{"@type":102,"interactionType":103,"userInteractionCount":29},"InteractionCounter",{"@type":104},"ViewAction",{"@type":106,"mainEntity":107},"FAQPage",[108,114,118],{"name":109,"@type":110,"acceptedAnswer":111},"What is the foreign currency approach for calculating NPV?","Question",{"text":112,"@type":113},"It computes NPV by expressing cash flows in a foreign currency and discounting them using an approach that accounts for the relationship between domestic and foreign risk-free rates and exchange rates.","Answer",{"name":115,"@type":110,"acceptedAnswer":116},"How do risk-free rates in two countries affect the foreign currency discounting rate?",{"text":117,"@type":113},"The method uses the domestic and foreign risk-free rates along with the spot exchange rate relationship to derive an adjusted discounting rate for foreign currency cash flows.",{"name":119,"@type":110,"acceptedAnswer":120},"How does withholding tax change the project NPV?",{"text":121,"@type":113},"Withholding tax reduces the net cash flows received, so the recalculated foreign-currency NPV becomes different from the case without withholding tax; the questions specifically ask to compute and interpret the impact.","https://schema.org",{"og:url":83,"og:type":124,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":126,"canonical":83},"index,follow",{"doc_id":128,"site_id":62},390312,1791470672,{"code":4,"msg":5,"data":131},{"doc_id":128,"user_id":132,"nickname":92,"user_avatar":133,"doc_module":4,"category_id":19,"category_name":20,"doc_title":65,"doc_description":67,"doc_content":134,"file_id":135,"file_url":136,"file_type":137,"file_size":138,"view_count":29,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":139,"language":140,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":141,"faqs":142,"seo_title":143,"seo_description":67,"update_tm":144,"read_time":145,"preview_page_count":4},5909892115043,"https://ap-avatar.wpscdn.com/davatar_6f874abed73319feea01a86fa6f0fab8","PART1 IntnPART 2 ADR/GDRntomnadionoe ClitoP Budyding  \nRomng   \nInia141·8\\#\\#808一280000o(页PV  \nCole NPV CalculateNPV&therearetwoapproachesto 机ontonndioneCopita Budgoing,coe  \n  1 .2Home  cuorpncyApnoah  \n  好 e  isnot given then ue  ponp99.CashflowsatFR&CalculateNPV 0eigncwuency cagnh lows mte fphome  eoxency   n home carency arproadh woe  covent   \n#   2.foeigncwuency  Apploadh\n\nRae olua+e NPV in beoyn czuteoy  9hog Ao片dconvetit info onec(wuenc   0o0eign cundyc ot qadjusted discuning  s fo0ogn cauncy apoad, woe disenk   \nExample-01  \nIndian company evaluating a project inusCost of project=$10,00,Cash inflows year1 =$3,00,2 =$.5,00,3 =$6,00,0Current spot rate天/$=75Risk free rate in India=6%p.a.Risk free rate in USA=2%p.a.  \nRequired rate of return by Indian shareholdersin Rterm 16%p.a.  \nEvaluate the project using  \n(i)Domestic(Home)currency approach.  \n(ii)Foreign currency approach.  \n THome Ccency4pp2ad  \nW.N·L FR(usíngRP  \n BageNo.01   \n# CayculaLion o叶NPV\n\n\n|  |  | 上   | 2   | 3   |\n| --- | --- | --- | --- | --- |\n| V  \u003Cbr>p(6  \u003Cbr>Cf()  \u003Cbr>Exchange Rate(u-N)  \u003Cbr>CF($)   | -1000  \u003Cbr>5  \u003Cbr>-45000  \u003Cbr>1.000  \u003Cbr>-5000   | 300  \u003Cbr>千千·94  \u003Cbr>23382  \u003Cbr>0.862  \u003Cbr>20155   | 500  \u003Cbr>81  \u003Cbr>40500  \u003Cbr>0·43  \u003Cbr>30092   | 600  \u003Cbr>84.18  \u003Cbr>50508  \u003Cbr>0·641  \u003Cbr>323千S   |\n\nNPV=F623  \n# 2 foraign caMrncy A1Adjstediscounting Rate\n\n=  11.62%  \n\n|  | 0   |  | 2   | 3   |\n| --- | --- | --- | --- | --- |\n|  | 1.00  \u003Cbr>一I000    | 0.896  \u003Cbr>300   | 0.803   \u003Cbr>500    | 0·\\#19  \u003Cbr>60   |\n| PV   | -1000    | 268.80    | 01.50   | 4 31.40    |\n\nPv=$101.0NeV))=$101.F0x95:*62F   \n| Year   | Cash in flow   |\n| --- | --- |\n| 工  \u003Cbr>2  \u003Cbr>3  \u003Cbr>4S   | US$20,00,000  \u003Cbr>US$25,00,000  \u003Cbr>US$30,00,000  \u003Cbr>US$40,00,000  \u003Cbr>US$50,00,000   |\n\nH.60  \nH0COFy  \nQUESTION-01  \nABC Ltd.is considering a project ir US whichwill involve an initial investment of US $  \n1,10,00,000.The project will have 5 years of life.Current spot exchange rate is天48 per US $.Therisk free rate in US is 8%and the same in India is12%.Cash inflow from the project is as follows:  \nCalculate the NPV of the project using foreiqncurrency approach.Required rate of return onthis project is 14%.  \nQUESTION-02  \nW·N·上DiSc Rqle in us  \nX Ltd.,an Indian company,is considering a proposal to  \n\n|  investment of USD 1,65,00,000 in Latin America.  \u003Cbr>ect will have a life of 5 years.The current spot  \u003Cbr>e rate is INR/USD 72.All investments and  \u003Cbr>s will occur in USD.The USD and INR risk free  \u003Cbr>e 8%and 12%respectively.The following cash  \u003Cbr>xpected from the project.   |  | 二  g·93%   |  |  |  |\n| --- | --- | --- | --- | --- | --- |\n| Year   | Cash Inflows(USD)   | yEAR   | ep()   | (90)   | PV   |\n| 1  \u003Cbr>2  \u003Cbr>3  \u003Cbr>4  \u003Cbr>5   | 30,00,000  \u003Cbr>37,50,000  \u003Cbr>45,00,000  \u003Cbr>60,00,000  \u003Cbr>75,00,000   |  |  |  |  |\n|  |  | I  \u003Cbr>2  \u003Cbr>3  \u003Cbr>5  \u003Cbr>NoV   \u003Cbr>()pvco  \u003Cbr>pvC   | f500000  \u003Cbr>6o0000  \u003Cbr>45000u  \u003Cbr>3750000  \u003Cbr>300000   | 0·623  \u003Cbr>10.685  \u003Cbr>1・753   \u003Cbr>0.82平  \u003Cbr>0·910   | 9*2500  \u003Cbr>9216000  \u003Cbr>3388500   \u003Cbr>3101250  \u003Cbr>2+30000   |\n| required rate of return on the project as(14%.  \u003Cbr>required to calculate:  \u003Cbr>foreign currency  \u003Cbr>viability of the project using  \u003Cbr>oach.  \u003Cbr> will be the impact if there is a withholding tax of  \u003Cbr>applicable on the project.  \u003Cbr>(Exam January-2021)   |  |  |  |  |  |\n|  |  |  |  |  | 150225  \u003Cbr>16500000  \u003Cbr>18002256   |\n\nmake an  \nThe proj  \nexchang  \nrevenue  \nrates ar  \nflow is e  \nefed houl herce poyed  ce.incnPV   \nAssume   \nYou are   \n(i)The   \nappr  \n(ii)What  \n10%  \n(ageN0.02)  \n=2108162000 oV月)=150250x  \nacddion kp  c tg0  \nPVCI=18002250 )以thomoo大pv 16202025  一)pVcoNoV()29年94516500000NPV()=-297975×72x≠    一21454200  \ninceNPV is negalve,hemo boye bhon8t be acste  \n Hw0Hop fge   \nQUESTION-04  \n   \nXY Limited is engaged in large retail business inIndia,It is contemplating for expansion into acountry of(Africa by acquiring a group of storeshaving the same line of operation as that of India.  \n   \n   ","cbCaiml0DjwbCDPz","https://ap.wps.com/l/cbCaiml0DjwbCDPz","pdf",4901960,39,"English","# NPV Calculation - Foreign Currency Approach\n## Domestic currency vs foreign currency approach\n## Adjusted discounting rate using risk-free rates\n## Worked examples and NPV evaluation\n## Exam-style questions (with withholding tax and volatility scenarios)","[{\"question\":\"What is the foreign currency approach for calculating NPV?\",\"answer\":\"It computes NPV by expressing cash flows in a foreign currency and discounting them using an approach that accounts for the relationship between domestic and foreign risk-free rates and exchange rates.\"},{\"question\":\"How do risk-free rates in two countries affect the foreign currency discounting rate?\",\"answer\":\"The method uses the domestic and foreign risk-free rates along with the spot exchange rate relationship to derive an adjusted discounting rate for foreign currency cash flows.\"},{\"question\":\"How does withholding tax change the project NPV?\",\"answer\":\"Withholding tax reduces the net cash flows received, so the recalculated foreign-currency NPV becomes different from the case without withholding tax; the questions specifically ask to compute and interpret the impact.\"}]","NPV Calculation - Foreign Currency Approach - Practice Questions | PDF",1790332621,98]