Which of the following is unique to foreign project assessment in the capital budgeting decision?
A) Project cash flows must be determined.
B) Parent cash flows and project cash flows are the same.
C) Local tax issues affect the determination of free cash flows and the remittance of earnings.
D) Inflation is not an issue, because companies use the same inflation rate in both the domestic and international setting in order to make the analysis more comparative.

Question

Quizplus · Accepted Answer

Local tax issues can have a significant impact on the determination of free cash flows, as well as on the remittance of earnings from the foreign project back to the parent company. This is unique to foreign project assessment and does not apply to domestic projects. The other options are not unique to foreign project assessment and apply to both domestic and international capital budgeting decisions.

Which of the Following Is Unique to Foreign Project Assessment