International Pooch is headquartered in Canada, but is considering the construction of a plant in Japan. If they use the foreign currency approach to calculating the NPV, they will:
1) Convert all yen cash flows into dollars;
2) Discount the dollar cash flows at the firm's required return for dollar denominated cash flows;
3) Compute the NPV in yen.

Foreign Currency Approach

A method of managing financial accounts that involves conversion to and from foreign currencies in international transactions.

NPV

A rephrased definition of Net Present Value, it assesses the worth of future cash flows in today's dollars, subtracting the initial investment.

Yen Cash Flows

Cash inflows and outflows denominated in Japanese Yen, particularly relevant in financial analyses involving Japanese companies or investments.