When assessing a German project administered by a German subsidiary of a U.S.-based MNC solely from the German subsidiary's perspective, which variable will most likely influence the capital budgeting analysis?
A) the withholding tax rate
B) the euro's exchange rate
C) the U.S. tax rate on earnings remitted to the United States
D) the German government's tax rate
E) the withholding tax rate AND the U.S. tax rate on earnings remitted to the United States

Question

Quizplus · Accepted Answer

When assessing a German project solely from the German subsidiary's perspective, the variable that will most likely influence the capital budgeting analysis is the German government's tax rate. While the other variables may also have an impact, the German subsidiary's focus will primarily be on the tax implications within Germany.

When Assessing a German Project Administered by a German Subsidiary