When evaluating a capital expenditure to be made in a foreign country, the parent firm must be concerned with the
A)exchange rate risk
B)cash flows that can be expected to be received by the parent
C)greater uncertainty associated with tax rates in the host country
D)all these

Question

Quizplus · Accepted Answer

When evaluating a capital expenditure to be made in a foreign country, the parent firm must consider all of these factors. Exchange rate risk can affect the returns on the investment, cash flows that can be expected to be received by the parent are important for evaluating the profitability of the investment, and tax rates in the host country can affect the overall cost of the investment. Therefore, the best choice is D, all of these.

When Evaluating a Capital Expenditure to Be Made in a Foreign