One of the differences between capital budgeting for domestic and foreign operations is that the:
A) cash flow estimation is simple for foreign operations.
B) repatriation of earnings does not occur for foreign operations.
C) cash flows for foreign operations are subject to future exchange rate changes.
D) foreign operations are free from taxes imposed by home-country and host-country.
E) foreign operations are always less riskier than domestic operations.

Question

Quizplus · Accepted Answer

Cash flows for foreign operations are subject to future exchange rate changes, which can significantly impact the profitability of the investment. This is not a concern for domestic operations, where the currency remains constant. The other options presented are either incorrect or too general.

One of the Differences Between Capital Budgeting for Domestic and Foreign