When an MNC analyzes the feasibility of a project, it should consider the:
A) variability of the project's cash flow.
B) correlation of the project's cash flow relative to the prevailing cash flows of the MNC.
C) variability of the project's cash flow AND correlation of the project's cash flow relative to the prevailing cash flows of the MNC.
D) None of these are correct.

Question

Quizplus · Accepted Answer

In order to properly analyze the feasibility of a project, an MNC should consider both the variability of the project's cash flow (to assess risk) and the correlation of the project's cash flow relative to the prevailing cash flows of the MNC (to determine its potential impact on the overall financial performance of the company). Therefore, options A and B are both incomplete and option D is incorrect.

When an MNC Analyzes the Feasibility of a Project, It