CH 14 Abbr - C H A P T E R 14 14 Multinational Capital...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: C H A P T E R 14 14 Multinational Capital Budgeting Chapter Overview Chapter A. Subsidiary versus Parent Perspective B. Input for the Multinational Capital Budgeting C. Factors to Consider in Multinational Capital Budgeting D. Adjusting Project Assessment for Risk Chapter 14 Objectives Chapter This chapter will: A. Compare the capital budgeting analysis of an MNC’s subsidiary versus its parent B. Demonstrate how multinational capital building can be applied to determine whether an international project should be implemented C. Explain how the risk of international projects can be assessed. A. Subsidiary versus Parent Perspective 1. Tax Differentials 1. Tax Differentials 2. Restricted Remittances 3. Excessive Remittances 4. Exchange Rate Movements 5. Summary of Factors Process of Remitting Subsidiary Earnings to Parent 14.1 14.1 B. Input for the Multinational Capital Budgeting Capital 1. Economic and Financial Characteristics Involved a. Initial Investment b. Price and Consumer Demand c. Costs d. Tax Laws e. Remitted Funds f. Exchange Rates g. Salvage Value h. Required Rate of Return C. Factors to Consider in Multinational Capital Budgeting Multinational 1. Exchange Rate Fluctuations 2. Inflation Sensitivity of the Project’s NPV to Different Exchange Rate Scenarios: Spartan, Inc. 14.4 14.4 C. Factors to Consider in Multinational Capital Budgeting Multinational 3. Financing Arrangement a. Subsidiary Financing b. Parent Financing c. Comparison of Parent versus Subsidiary Financing d. Financing with Other Subsidiaries’ Retained Earnings C. Factors to Consider in Multinational Capital Budgeting Multinational 4. Blocked Funds 5. Uncertain Salvage Value 6. Impact of Project on Prevailing Cash Flows 7. Host Government Incentives 8. Real Options D. Adjusting Project Assessment for Risk for 1. Risk­Adjusted Discount Rate 2. Sensitivity Analysis 3. Simulation ...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern