Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Objectives
This chapter identifies additional considerations in multinational capital budgeting versus domestic capital budgeting. The specific objectives are: to compare the capital budgeting analysis of an MNCs subsidiary with that of its parent; to demonstrate how multinational capital budgeting can be applied to determine whether an international project should be implemented; and to explain how the risk of international projects can be assessed.
2
initial outlay
S
t =1
(1 + k ) k = the required rate of return on the project n = project lifetime in terms of periods
+ salvage value n
10
12
salvage value. The salvage value typically has a significant impact on the projects NPV, and the MNC may want to compute the break-even salvage value. (298) * Impact of project on prevailing cash flows. The new investment may compete with the existing business for the same customers. (P299 Exhibit11.7) * Host government incentives. These should also be considered in the analysis. * Real Options Some capital budgeting projects contain real options, which can enhance the value of a project. (P299)
16
19
20
23