If a project has a positive NPV but the NPV is greater from the project's than from the parent's perspective, then the parent firm should ______.

Question

Quizplus · Accepted Answer

If the project has a positive NPV but the NPV is greater from the project's than from the parent's perspective, it means that the project is generating cash flows in a foreign currency that may have a different value than the parent firm's currency. In this case, the parent firm should accept the project and hedge the foreign currency cash flows to mitigate any currency risk. This way, the parent firm can benefit from the positive NPV of the project without exposing itself to currency risk.

If a Project Has a Positive NPV but the NPV