International Financial Management
14th Edition
ISBN: 9780357130698
Author: Madura
Publisher: Cengage
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Why should capital budgeting for subsidiary projects be assessed from the parent’s perspective? What additional factors that normally are not relevant for a purely domestic project deserve consideration in multinational capital budgeting?
What do managers use to evaluate domestic and international capital investment projects?
A) capital budgeting
B) multilateral netting
C) net present value
D) transfer pricing
E) parent's perspective
Discuss the important factors one should consider in the international capital budgeting process to be undertaken by a multinational firm.
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- what risks and capital budgeting issues may arise with international investments and what strategies will help to reduce these risks.arrow_forwardWhich of the following is matter if a U.S. parent firm plans to completely finance the establishment of its British subsidiary with existing funds from retained earnings. The discount rate of the NPV from the project would be affected by ______. A. the parent's cost of capital B. the sales volume of the subsidiary C. the economic conditions D. the cost of borrowingarrow_forwardExplain how political risk and exchange rate risk increase the uncertainty of international projects for the purpose of capital budgeting.arrow_forward
- Capital budgeting for a foreign project is considerably more complex than the domestic case. Discuss FIVE major factors contribute to this greater complexities.arrow_forwardCapital budgeting projects are classified as either independent projects or mutually exclusive projects. [Consider NPV, IRR, Payback Period, and Profitability Index] What is a independent project? What is a mutually exclusive project? Why (or under what circumstance) should either be accepted?arrow_forwardThere are various risk factors that complicate multinational capital budgeting process . List examples of the risk factors and briefly explain .arrow_forward
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