When a parent corporation performs a capital budgeting analysis, the additional risks due to the foreign location of a project should generally be handled by

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The additional risks due to the foreign location of a project should generally be handled by adjusting the cash flows to the parent corporation. This can be done by taking into account additional costs associated with operating in a foreign country, such as currency exchange rates, political instability, and cultural differences. By adjusting the cash flows, the parent corporation can obtain a more accurate picture of the project's profitability and make a more informed decision about whether to pursue the investment. Decreasing the project's hurdle rate, modifying quarterly tax payments, or informing investors of the risk potential may be appropriate actions in some situations, but they are not the best choice for handling the additional risks due to the foreign location of a project.

When a Parent Corporation Performs a Capital Budgeting Analysis, the Additional