The discrepancy between the feasibility of a project in a host country from the perspective of the U.S. parent versus the subsidiary administering the project is likely to be greater for projects in countries where:
A) the taxes are the same as in the United States.
B) there are no blocked fund restrictions.
C) the currency of the host country is expected to depreciate consistently.
D) None of these are correct; a discrepancy is not possible.

Question

Quizplus · Accepted Answer

If the currency of the host country is expected to depreciate consistently, the subsidiary administering the project will have a harder time generating profits and repatriating them to the U.S. parent due to the exchange rate risk. This will likely lead to a greater discrepancy in the feasibility assessment between the U.S. parent and the subsidiary administering the project.

The Discrepancy Between the Feasibility of a Project in a Host