Python Snake Oil Company is based in the United States. Management is considerin

Question

Python Snake Oil Company is based in the United States. Management is considering an expansion project that would increase sales in Canada to 30% of sales from 20% of sales. In determining the hurdle rate for the project what should be used for the risk free rate?

Question 6 options:

U.S. Treasury bond

Canadian Government bond

Mix of the two – 70% US dollar and 30% Canadian dollar

None of the above

U.S. Treasury bond

Canadian Government bond

Mix of the two – 70% US dollar and 30% Canadian dollar

None of the above

Explanation / Answer

since the python snake oil is a united state based company ,US treasury bond rate should be used as a risk free rate in determining the hurdle rate .

correct option is "A"

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