When dealing with international capital budgeting projects, the value of the project is NOT sensitive to the firm's cost of capital.

Question

Quizplus · Accepted Answer

The value of the project is sensitive to the firm's cost of capital in international capital budgeting projects as it affects the discount rate used to calculate the present value of future cash flows. A higher cost of capital leads to a lower present value of future cash flows, thus reducing the value of the project. Therefore, it is essential to consider the cost of capital while evaluating the viability of international capital budgeting projects.

When Dealing with International Capital Budgeting Projects, the Value of the Project