When evaluating a capital expenditure to be made in a foreign country, the parent firm must be concerned with the _____.
A) exchange rate risk
B) cash flows that can be expected to be received by the parent
C) greater uncertainty associated with tax rates in the host country
D) All of these are correct

Question

Quizplus · Accepted Answer

All of these factors are important for a parent firm to consider when evaluating a capital expenditure in a foreign country. Exchange rate risk can impact the return on investment, cash flows that can be expected are essential to determine the financial feasibility of the project, and greater uncertainty associated with tax rates in the host country can affect the overall profitability of the investment.

When Evaluating a Capital Expenditure to Be Made in a Foreign