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) Discount yen cash flows at the required return on yen investments;
2) Compute the NPV in yen;
3) Convert the yen NPV to a dollar NPV.

Foreign Currency Approach

A method that involves evaluating financial statements and investments in the context of foreign currency exchange rates and their fluctuations.

NPV

Net Present Value, a financial metric used to evaluate the profitability of an investment by calculating the present value of expected future cash flows.

Yen Investments

Investments denominated in Japanese yen, can involve securities, bonds, or other financial instruments within the Japanese market.