The only proper way to estimate the NPV of a foreign project is to discount the appropriate cash flows first and then convert them to the domestic currency at the current spot rate.

Question

Quizplus · Accepted Answer

The proper way to estimate the NPV of a foreign project is to discount the appropriate cash flows at the appropriate discount rate, which should account for factors such as exchange rate risk and country risk. The cash flows should then be converted to the domestic currency at the expected future exchange rate, not the current spot rate.

The Only Proper Way to Estimate the NPV of a Foreign