When a firm 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) A and B
D) none of the above

Question

Quizplus · Accepted Answer

Both A and B should be considered when analyzing the feasibility of a project. The variability of the project's cash flow is important to assess the risk associated with the project, while the correlation between the project's cash flow and the MNC's prevailing cash flows is important to assess the impact of the project on the overall cash flow of the MNC. Therefore, both factors are critical in determining the feasibility of a project.

When a Firm Analyzes the Feasibility of a Project, It