[Solved] Which of the following is not true regarding letters of credit?

Q.	Which of the following is not true regarding letters of credit?
A.	They are issued by banks on behalf of the importer promising to pay the exporter.
B.	A revocable letter of credit can be cancelled or revoked at any time without prior notification to the beneficiary.
C.	They guarantee that the goods shipped are the goods purchas
Answer» C. They guarantee that the goods shipped are the goods purchas

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Assume that Baps Corporation is considering the establishment of a subsidiary in Norway. The initial investment required by the parent is $5,000,000. If the project is undertaken, Baps would terminate the project after four years. Baps' cost of capital is 13%, and the project is of the same risk as Baps' existing projects. All cash flows generated from the project will be remitted to the parent at the end of each year. Listed below are the estimated cash flows the Norwegian subsidiary will generate over the project's lifetime in Norwegian kroner (NOK): Year 1 NOK 10,000,000 Year 2 NOK 15,000,000 Year 3 NOK 17,000,000 Year 4 NOK 20,000,000 The current exchange rate of the Norwegian kroner is $.135. Baps' exchange rate forecast for the Norwegian kroner over the project's lifetime is listed below: Year 1 $.13 Year 2 $.14 Year 3 $.12 Year 4 $.15 Baps is also uncertain regarding the cost of capital. Recently, Norway has been involved in some political turmoil. What is the net p