Investment Analysis
Exam Review
Course Introduction
Investment Analysis provides a comprehensive introduction to the principles, techniques, and tools used to evaluate and manage financial investments. The course covers the fundamentals of financial markets, various asset classes, risk and return analysis, portfolio construction, security valuation, and performance measurement. Emphasis is placed on both theoretical concepts and practical applications, including the use of quantitative tools for analyzing securities such as stocks, bonds, and alternative investments. Students will develop the analytical skills necessary to assess investment opportunities, construct diversified portfolios, and make informed decisions in a dynamic economic environment.
Recommended Textbook Fundamentals of Corporate Finance Global 3rd Edition by Jonathan Berk
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Page 2
Chapter 1: The Corporation
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Q1) Which of the following statements regarding limited partnerships is TRUE?
A)There is no limit on a limited partner's liability.
B)A limited partner's liability is limited by the amount of their investment.
C)A limited partner is not liable until all the assets of the general partners have been exhausted.
D)A general partner's liability is limited by the amount of their investment.
Answer: B
Q2) Which of the following organization forms for a business in the U.S.does NOT avoid double taxation?
A)Partnership
B)"C" corporation
C)"S" corporation
D)Limited Partnership
Answer: B
Q3) In a corporation, the ultimate decisions regarding business matters are made by:
A)the Board of Directors.
B)debt holders.
C)shareholders.
D)investors.
Answer: A
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Chapter 2: Introduction to Financial Statement Analysis
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Q1) Which of the following balance sheet equations is INCORRECT?
A)Assets - Liabilities = Shareholders' Equity
B)Assets = Liabilities + Shareholders' Equity
C)Assets - Current Liabilities = Non-current (Long Term)Liabilities
D)Assets - Current Liabilities = Non-current (Long Term)Liabilities + Shareholders' Equity
Answer: C
Q2) Calculate Luther's return of equity (ROE), return of assets (ROA), and price-to-earnings ratio (P/E)for the year ending December 31, 2011.
Answer: ROE = NI/shareholder equity = 10.2/63.6 = .160 or 16.0%
ROA = NI/total assets
Here total assets are not given, but we know that Total Assets = Total Liabilities + Shareholder Equity, so ROA = 10.2/386.7 = .026 or 2.6%
P/E = price/EPS or Market Cap/NI = (8.0 × $15)/$10.2 = 11.8
Q3) If on December 31, 2011 Luther has 8 million shares outstanding trading at $15 per share, then what is Luther's market-to-book ratio?
Answer: market-to-book = market value of equity/book value of equity market-to-book = 8 million × $15/$63.6 = 1.89
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Chapter 3: Financial Decision Making and the Law of One
Price
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Q1) If the risk-free rate of interest is 7.5%, then the value of security "B" is closest to:
A)$91.00
B)$92.50
C)$93.00
D)$100.00
Answer: D
Q2) Due to a pre-existing contract, Recycle America Inc. has the opportunity to acquire 10,000 pounds of scrap aluminum and 2,500 pounds of scrap lead for $10,750. If the current market price for scrap aluminum is $0.83 per pound and the current market price for lead is $1.06 per pound, then the added benefit (cost)to you if you acquire this metal is:
A)($200)
B)$200
C)($1,925)
D)$1,925
Answer: B
Q3) The price per share of the ETF in a normal market is:
Answer: Value of ETF = 2 × 121.57 + 3 × 36.59 + 3 × 3.15 = $362.36
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Chapter 4: The Time Value of Money
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Q1) You are considering investing in a zero coupon bond that will pay you its face value of $1000 in ten years. If the bond is currently selling for $485.20, then the IRR for investing in this bond is closest to:
A)12%
B)8.0%
C)7.5%
D)10%
Q2) At an annual interest rate of 7%, the present value of $5,000 received in five years is closest to:
A)$3,565
B)$6,750
C)$7,015
D)$7,035
Q3) Define the following terms:
(a)perpetuity
(b)annuity
(c)growing perpetuity
(d)growing annuity
Q4) Draw a timeline detailing Joe's cash flows from the sale of the family business.
Q5) The future value at retirement (age 65)of your savings is:
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Chapter 5: Interest Rates
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Q1) The effective annual rate on your firm's borrowings is closest to:
A)6.00%
B)6.14%
C)6.25%
D)6.30%
Q2) Suppose the interest rate is 9% APR with monthly compounding. Then the present value of an annuity that pays $250 every three months for the next five years is closest to:
A)$2,280
B)$3,985
C)$3,990
D)$3,995
Q3) The effective annual rate (EAR)for a loan with a stated APR of 8% compounded monthly is closest to:
A)7.72%
B)8.00%
C)8.30%
D)8.66%
Q4) What is the effective after-tax rate of each instrument, expressed as an EAR?
Q5) Should you purchase the delivery truck or lease it? Why?
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Chapter 6: Valuing Bonds
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Q1) Which of the following statements is FALSE?
A)Zero-coupon bonds are also called pure discount bonds.
B)The IRR of an investment opportunity is the discount rate at which the NPV of the investment opportunity is equal to zero.
C)The yield to maturity for a zero-coupon bond is the return you will earn as an investor from holding the bond to maturity and receiving the promised face value payment.
D)When prices are quoted in the bond market, they are conventionally quoted in increments of $1000.
Q2) Consider a zero coupon bond with 20 years to maturity. The amount that the price of the bond will change if its yield to maturity decreases from 7% to 5% is closest to:
A)$120
B)-$53
C)$53
D)$673
Q3) What is the price today of a two-year, default-free security with a face value of $1000 and an annual coupon rate of 5.75%? Does this bond trade at a discount, premium, or at par?
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Page 8
Chapter 7: Investment Decision Rules
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Q1) What is one of the incremental IRRs for project B over project A? Would you feel comfortable basing your decision on the incremental IRR?
Q2) When using the internal rate of return (IRR)investment rule, we compare:
A)the average return on the investment opportunity to returns on all other investment opportunities in the market.
B)the average return on the investment opportunity to returns on other alternatives in the market with equivalent risk and maturity.
C)the NPV of the investment opportunity to the average return on the investment opportunity.
D)the average return on the investment opportunity to the risk-free rate of return.
Q3) Assuming that the discount rate for project A is 16% and the discount rate for B is 15%, then given that these are mutually exclusive projects, which project would you take and why?
Q4) If the discount rate for project A is 16%, then what is the NPV for project A?
Q5) If your new strip mall will have 15,000 square feet of retail space available to be leased, to which businesses should you lease and why?
Q6) If the discount rate for project B is 15%, then what is the NPV for project B?
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Page 9
Chapter 8: Fundamentals of Capital Budgeting
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Q1) The free cash flow from Shepard Industries project in year one is closest to:
A)$240
B)$300
C)-$5
D)$390
Q2) Which of the following statements is FALSE?
A)Sensitivity analysis allows us to explore the effects of errors in our estimated inputs in our NPV analysis for the project.
B)To compute the NPV for a project, you need to estimate the incremental cash flows and choose a discount rate.
C)Estimates of the cash flows and cost of capital are often subject to significant uncertainty.
D)When we are certain regarding the input to a capital budgeting decision, it is often useful to determine the break-even level of that input.
Q3) The NPV for Epiphany's Project is closest to:
A)$4,825
B)$39,000
C)$11,946
D)$20,400
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Chapter 9: Valuing Stocks
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Q1) Which of the following statements is FALSE?
A)Stock markets aggregate the information and view of many different investors.
B)Only in the relatively rare case in which we have some superior information that other investors lack regarding the firm's cash flows and cost of capital would it make sense to second-guess the market stock price.
C)In most situations, a valuation model is best applied to tell us something about the value of the firm's stock.
D)The efficient market hypothesis implies that securities will be fairly priced, based on their future cash flows, given all information that is available to investors.
Q2) Suppose you plan to hold Von Bora stock for one year. The price one would expect to be able to sell a share of Von Bora stock for in one year is closest to:
A)$26.50
B)$22.70
C)$23.15
D)$24.10
Q3) If DM has $500 million of debt and 14 million shares of stock outstanding, then what is the price per share for DM Corporation?
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Page 11
Chapter 10: Capital Markets and the Pricing of Risk
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Q1) If the expected return on the market is 11% and the risk-free rate is 4%, then the expected return of investing in IBM is closest to:
A)9.1%
B)10.3%
C)11.0%
D)12.0%
Q2) Which of the following statements is FALSE?
A)The expected return is the return is the return that actually occurs over a particular time period.
B)If you hold the stock beyond the date of the first dividend, then to compute you return you must specify how you invest any dividends you receive in the interim.
C)The average annual return of an investment during some historical period is simply the average of the realized returns for each year.
D)The realized return is the total return we earn from dividends and capital gains, expressed as a percentage of the initial stock price.
Q3) What is the market portfolio?
Q4) Which pharmaceutical company faces less risk?
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Chapter 11: Optimal Portfolio Choice and the Capital Asset Pricing Model
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Q1) Which of the following equations is INCORRECT?
A)E[R<sub>xCML</sub>] = r<sub>f</sub> + x(E[R<sub>Mkt</sub>] + r<sub>f</sub>)
B)r<sub>i</sub> = r<sub>f</sub> + b(E[R<sub>Mkt</sub>] - r<sub>f</sub>)
C)SD(R<sub>xCML</sub>)= xSD(R<sub>Mkt</sub>)
D)E[R<sub>xCML</sub>] = (1 - x)r<sub>f</sub> + xE[R<sub>Mkt</sub>]
Q2) The beta on Paul's Portfolio is closest to:
A)1.5
B)1.8
C)1.3
D)1.0
Q3) Which of the following statements is FALSE?
A)Dividing the covariance by the volatilities ensures that correlation is always between -1 and +1.
B)Volatility is the square root of variance.
C)The closer the correlation is to 0, the more the returns tend to move together as a result of common risk.
D)If two stocks move together, their returns will tend to be above or below average at the same time, and the covariance will be positive.
Q4) Calculate the correlation between Stock Y's and Stock Z's returns .
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Chapter 12: Estimating the Cost of Capital
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Q1) Galt Industries has a market capitalization of $50 billion, $30 billion in BBB rated debt, and $8 billion in cash. If Galt's equity beta is 1.15, then Galt's underlying asset beta is closest to:
A)0.83
B)0.92
C)1.00
D)1.15
Q2) Which of the following is NOT considered to be an important choice when estimating beta?
A)The choice of the time horizon to use for estimation
B)The choice of method used to extrapolate beta
C)The choice between weekly and monthly returns
D)The choice of index used as the market portfolio
Q3) The overall asset beta for Wyatt Oil is closest to:
A)0.95
B)1.05
C)1.15
D)1.25
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14
Chapter 13: Investor Behavior and Capital Market Efficiency
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Q1) Which of the following statements is FALSE?
A)It is not actually necessary to identify the efficient portfolio itself. All that is required is to identify a collection of portfolios from which the efficient portfolio can be constructed.
B)Although we might not be able to identify the efficient portfolio itself, we know some characteristics of the efficient portfolio.
C)An efficient portfolio can be constructed from other diversified portfolios.
D)An efficient portfolio need not be well diversified.
Q2) Portfolio "C":
A)is less risky than the market portfolio.
B)has a relatively lower expected return than predicted.
C)is underpriced.
D)has a negative alpha.
Q3) The alpha for the informed investors is closest to:
A)-2.4%
B)-0.9%
Q4) Explain why the market portfolio proxy may not be efficient.
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Chapter 14: Capital Structure in a Perfect Market
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Q1) The number of shares that Galt must issue is closest to:
A)15 million
B)25 million
C)30 million
D)40 million
Q2) Suppose you own 10% of the equity of Without. What is another portfolio you could hold that would provide you with the same exact cash flows?
Q3) Suppose the risk-free interest rate is 4%. If Nielson borrows $150 million today at this rate and uses the proceeds to pay an immediate cash dividend, then according to MM, the market value of its equity just after the dividend is paid would be closest to:
A)$0 million
B)$150 million
C)$250 million
D)$400 million
Q4) Prior to any borrowing and share repurchase, RC's EPS is closest to:
A)$0.60
B)$1.00
C)$1.20
D)$0.50
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Chapter 15: Debt and Taxes
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Q1) If Flagstaff currently maintains a debt to equity ratio of 1, then the value of Flagstaff's interest tax shield is closest to:
A)$10 million
B)$18 million
C)$11 million
D)$24 million
Q2) Which of the following statements is FALSE?
A)The tax deductibility of interest lowers the effective cost of debt financing for the firm.
B)When a firm uses debt financing, the cost of the interest it must pay is offset to some extent by the tax savings from the interest tax shield.
C)With tax-deductible interest, the effective after-tax borrowing rate is r( <sub>C</sub>).
D)The WACC represents the cost of capital for the free cash flow generated by the firm's assets.
Q3) Raceway Products has a market debt-to-equity ratio of .60, a corporate tax rate of 40%, and pays 8% interest on its debt. The interest tax shield on Raceway's debt lowers its WACC by what amount?
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Page 17
Chapter 16: Financial Distress, Managerial Incentives, and Information
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Q1) The cost of ________ is highest for firms that are likely to have profitable future growth opportunities requiring large investments.
A)asset substitution
B)debt overhang
C)debt covenants
D)debt maturity
Q2) Which of the following projects should Nielson Motors accept?
A)1 only
B)1, 2, and 3 only
C)1 and 4 only
D)2, 3, and 5 only
Q3) Suppose that MI has zero-coupon debt with a $125 million face value due next year. The initial value of MI's debt is closest to:
A)$125 million
B)$111 million
C)$100 million
D)$116 million
Q4) List five general categories of indirect costs associated with bankruptcy.
Page 18
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Chapter 17: Payout Policy
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Q1) The effective dividend tax rate for a one-year individual investor in 2006 is closest to:
A)20%
B)15%
C)35%
D)0%
Q2) The date on which the board authorizes the dividend is the:
A)declaration date.
B)distribution date.
C)record date.
D)ex-dividend date.
Q3) Omicron's enterprise value is closest to:
A)$500 million
B)$900 million
C)$450 million
D)$400 million
Q4) A member of Iota's board of directors suggests that Iota's stock price would be higher if they used the $200 million to repurchase shares instead of funding the expansion. If you were advising the board, what course of action would you recommend, expansion or repurchase? Which provides the higher stock price?
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Chapter 18: Capital Budgeting and Valuation With Leverage
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Q1) The unlevered cost of capital for Antelope Incorporated is closest to:
A)10.3%
B)9.9%
C)10.1%
D)9.5%
Q2) Given that Rose issues new debt of $50 million initially to fund the acquisition, the total value of this acquisition using the APV method is equal to?
Q3) Assume that to fund the investment Taggart will take on $150 million in permanent debt with the remainder of the investment funded through issuance of new equity. Assuming Taggart will incur a 2% (after-tax)underwriting fee on the new debt issue and a 5% underwriting fee on the issuance of new equity, the NPV of Taggart's new rail line is closest to:
A)$195 million
B)$200 million
C)$235 million
D)$240 million
Q4) Based upon the three comparable firms, calculate that most appropriate unlevered cost of capital for Aardvark to use on this new product.
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Page 20
Chapter 19: Valuation and Financial Modeling: a Case Study
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Q1) If Ideko's loans will have an interest rate of 6.8%, then the interest expense paid in 2009 is closest to:
A)$6,800
B)$7,310
C)$7,820
D)$7,990
Q2) The free cash flow to the firm in 2010 is closest to:
A)10,684
B)11,559
C)23,698
D)26,394
Q3) Assuming that Ideko has a EBITDA multiple of 9.4, then the continuation EV/Sales ratio of Ideko in 2010 is closest to:
A)1.9
B)1.7
C)1.6
D)1.8
Q4) What is the purpose of the sensitivity analysis?
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Chapter 20: Financial Options
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Q1) In describing Galt's equity as a call option, the maturity of this option is:
A)5 years
B)10 years
C)20 years
D)infinite
Q2) The holder of a put option has:
A)the obligation to sell a security for a given price.
B)the right to buy a security for a given price.
C)the right to sell a security for a given price.
D)the obligation to buy a security for a given price.
Q3) Which of the following statements is FALSE?
A)The intrinsic value of an option is the value it would have if it expired immediately.
B)A European option cannot be worth less than its American counterpart.
C)Put options increase in value as the stock price falls.
D)A put option cannot be worth more than its strike price.
Q4) Graph the payoff at expiration of a short position in a put option with a strike price of $20.
Q5) Describe the conditions when it would be optimal to exercise an American Call and an American Put option prior to their expiration.
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Chapter 21: Option Valuation
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Q1) Which of the following is NOT an input required by the Black-Scholes option pricing model?
A)The expected volatility of the stock
B)The expected return on the stock
C)The risk-free interest rate
D)The current stock price
Q2) Using the binomial pricing model, calculate the price of a two-year put option on Kinston stock with a strike price of $9.
Q3) Using the binomial pricing model, the calculated price of a one-year call option on KD stock with a strike price of $20 is closest to:
A)$2.40
B)$2.00
C)$2.15
D)$1.45
Q4) Using risk neutral probabilities, calculate the price of a two-year call option on Kinston stock with a strike price of $9.
Q5) Construct a binomial tree detailing the option information and payoffs for a call option with a $20 strike price that expires in one year.
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Chapter 22: Real Options
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Q1) Which of the following statements is FALSE?
A)It is tempting to use the Black-Scholes formula to value future growth options, but often there are good reasons why this formula might not price these options correctly.
B)When a firm has a real option to invest in the future it is known as a growth option.
C)Because growth options have value, they contribute to the value of any firm that has future possible investment opportunities.
D)Future growth opportunities can be thought of as a collection of real put options on potential projects.
Q2) The equivalent annual benefit of project B is closest to:
A)$5.05
B)$5.75
C)3.45
D)$3.40
Q3) Assuming that Kinston does not have the ability to sell the prototype in year one for $300,000, draw a decision tree detailing the Kinston Industries Mountain Bike Project.
Q4) Do out-of-the-money real options have value?
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Chapter 23: Raising Equity Capital
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Q1) Aaron Inc went public at $10 per share. Aaron's investment banker charged them $0.70 per share for the IPO. This fee is called a(n):
A)allocation spread.
B)underwriting spread.
C)greenshoe fee.
D)IPO fee.
Q2) Suppose that the post IPO value of Wyatt is its fair market value. Suppose Wyatt could have issued shares directly to investors at their fair market value, in a perfect market with no underwriting spread and no under pricing. If you raise the same amount of funds that you would have with the investment banker handling the underwriting, the share price in this case is closest to:
A)$35
B)$37
C)$46
D)$61
Q3) Describe the four characteristics of IPOs that puzzle financial economists.
Q4) What will the proceeds from the IPO be if Luther is selling 1.1 million shares?
Q5) How much money did the venture capitalists receive?
Q6) Based upon the price/revenue ratio, what would be a reasonable value for KD?
Page 25
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Chapter 24: Debt Financing
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Q1) Treasury securities that are pure discount bonds with original maturities ranging from a few days to 26 weeks are called:
A)TIPS.
B)Treasury bonds.
C)Treasury notes.
D)Treasury bills.
Q2) Which of the following statements is FALSE?
A)The registered bond system also facilitates tax collection because the government can easily keep track of all interest payments made.
B)Asset backed bonds and mortgage bonds are secured debt: Specific assets are pledged as collateral that bondholders have a direct claim to in the event of bankruptcy. C)Notes typically have longer maturities (more than ten years)than debentures.
D)Although the word "bond" is commonly used to mean any kind of debt security, technically a corporate bond must be secured.
Q3) What is the Yield to Maturity (YTM)on this bond?
Q4) What is the Yield to Call (YTC)on this bond?
Q5) What is the Yield to Maturity (YTM)on this bond?
Q6) What is the Yield to Call (YTC)on this bond?
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Chapter 25: Leasing
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Q1) Assuming that Rearden's annual lease payments are $1.2 million, then the amount of the lease-equivalent loan is closest to:
A)$3.8 million
B)$3.9 million
C)$4.0 million
D)$4.2 million
Q2) Which of the following statements regarding leases and taxes is FALSE?
A)In a non-tax lease, the lessee can deduct the interest portion of the lease payments as an interest expense.
B)In a true tax lease, the lease payments are treated as revenue for the lessor.
C)In a true tax lease, the lessee receives the depreciation deductions associated with the ownership of the asset.
D)The IRS separates leases into two broad categories: true tax leases and non-tax leases.
Q3) The lease rate for which Rearden will break even is closest to:
A)$1,110,000
B)$1,130,000
C)$1,150,000
D)$1,160,000
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Page 27
Chapter 26: Working Capital Management
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Q1) Which of the following statements is FALSE?
A)The Check Clearing for the 21st Century Act (Check 21), which became effective on October 28, 2004, eliminated the disbursement float due to the check-clearing process.
B)Trade credit is, in essence, a loan from the selling firm to its customer.
C)The accounts receivable balance represents the amount that a firm owes its suppliers for goods that it has received but for which it has not yet paid.
D)Providing financing at below-market rates is an indirect way to lower prices for only certain customers.
Q2) Describe "just-in-time" inventory management.
Q3) The percentage of Wyatt's receivables that are still eligible to take the discount is closest to:
A)20.1%
B)32.1%
C)38.3%
D)42.2%
Q4) Your firm purchases goods from its supplier on terms of 2/10, net 45. Calculate the effective annual cost to your firm if it chooses not to take advantage of the trade discount offered.
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Chapter 27: Short-Term Financial Planning
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Q1) Rearden Metal wants to raise $5 million using six-month commercial paper. The net proceeds to Rearden will be $4,865,000. The effect annual rate for this financing is closest to:
A)5.6%
B)6.6%
C)7.2%
D)8.4%
Q2) A loan agreement requires that the firm pay interest on the loan and pay back the principal in one lump sum at the end of the loan is called:
A)a short-term mortgage loan.
B)a single, end-of-period-payment loan.
C)a bridge loan.
D)a line of credit.
Q3) The temporary working capital needs for Hasbeen Toys in quarter 1 is closest to:
A)$0 million
B)$340 million
C)$770 million
D)$845 million
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Chapter 28: Mergers and Acquisitions
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Q1) Which of the following statements regarding recapitalization as a takeover defense is FALSE?
A)Another defense against a takeover is a recapitalization, in which a company changes its capital structure to make itself less attractive as a target.
B)Restructuring itself can produce efficiency gains, often removing the principal motivation for the takeover in the first place.
C)By increasing leverage on its own, the target firm can reap the benefit of the interest tax shields.
D)In many cases, a substantial portion of the synergy gains that an acquirer anticipates from a takeover are savings from a decrease in leverage as well as other cost reductions.
Q2) Assume that Martin pays no premium to acquire Luther. Calculate Martin's price-earnings (P/E)ratio both pre and post merger.
Q3) The structure of a merger transaction is summarized in a(n):
A)swap sheet.
B)term sheet.
C)exchange sheet.
D)merger sheet.
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Chapter 29: Corporate Governance
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Q1) Describe the main requirements of the Sarbanes-Oxley Act of 2002.
Q2) Agency costs are best defined as:
A)the costs imposed on a corporation through the laws and regulations that control corporations.
B)the costs a corporation incurs as the result of fraud.
C)the costs that arise when there are conflicts of interest between a firm's stakeholders.
D)the costs associated with compensating managers when ownership and control are separated in a firm.
Q3) Directors who are not as directly connected to the firm but who have existing or potential business relationships with the firm are called:
A)gray directors.
B)independent directors.
C)advising directors.
D)inside directors.
Q4) What is corporate governance?
Q5) What is the role of takeovers in corporate governance?
Q6) How does a pyramid structure work?
Q7) What is the difference between Inside, gray, and outside directors?
Page 31
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Chapter 30: Risk Management
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Q1) Which of the following statements regarding futures contracts is FALSE?
A)Both the buyer and the seller can get out of the contract at any time by selling it to a third party at the current market price.
B)Futures prices are not prices that are paid today. Rather, they are prices agreed to today, to be paid in the future.
C)Futures contracts are traded anonymously on an exchange at a publicly observed market price and are generally very illiquid.
D)Traders are required to post collateral, called margin, when buying or selling commodities using futures contracts.
Q2) If the going price next year is $1.40 per pound, d'Anconia Copper's operating profit next year will be closest to:
A)$325 million
B)$365 million
C)$375 million
D)$425 million
Q3) What are some of the disadvantages of long-term supply contracts?
Q4) What is the actuarially fair cost of full insurance?
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Chapter 31: International Corporate Finance
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Q1) Assuming that the Irish and Japanese subsidiaries did not exist, the U.S. tax liability on the Mexican subsidiary would be closest to:
A)$0
B)$9 million
C)$39 million
D)$106 million
Q2) Which of the following statements is FALSE?
A)If the foreign tax rate exceeds the U.S. tax rate, companies must pay this higher rate on foreign earnings.
B)U.S. tax policy allows companies to apply the part of the tax credit that is not used to offset domestic taxes owed, so this extra tax credit is not wasted.
C)If the foreign tax rate is less than the U.S. tax rate, the company pays total taxes equal to the U.S. tax rate on its foreign earnings.
D)A full tax credit is given for foreign taxes paid up to the amount of the U.S. tax liability.
Q3) How do we make adjustments when a project has inputs and outputs in different currencies?
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