Which of the following is characteristic of the parent's perspective in capital budgeting?
A) It estimates future cash flows from the project in the functional currency.
B) It adds the subsidiary's after-tax operating cash flows with the project's cost of capital.
C) It seldom uses the currency of the primary economic environment in which it operates.
D) It estimates the incremental after-tax operating cash flows in the subsidiary's local currency.

Question

Quizplus · Accepted Answer

The parent's perspective in capital budgeting typically involves estimating future cash flows from the project in the functional currency, which is often the parent company's home currency. This approach helps in assessing the project's impact on the parent company's financials directly.

Which of the Following Is Characteristic of the Parent's Perspective