When a foreign project is analyzed from the parent's point of view, the additional risk that stems from it's "foreign" location is typically measured by ________ or ________.

Question

Quizplus · Accepted Answer

The additional risk that comes from a foreign location is typically measured by adjusting the discount rates or adjusting the cash flows. This is because foreign projects are subject to additional risks such as political instability, currency fluctuations, and differences in the legal systems. Adjusting the discount rates involves increasing the required rate of return to compensate for the additional risk, while adjusting the cash flows involves estimating the impact of the additional risks on future cash flows. Therefore, option C is the best choice.

When a Foreign Project Is Analyzed from the Parent's Point