International capital budgeting will require that managers ___________.

Question

Quizplus · Accepted Answer

International capital budgeting requires managers to recognize all risks associated with a foreign investment, including political, currency, and economic risks. They must also consider the potential rewards of the investment. In order to compare different investments on an equal basis, all incremental cash flows should be converted to the domestic currency or the domestic discount rate should be converted to an equivalent rate in the foreign country. Additionally, the discount rate may need to be increased to account for any added risks associated with a particular country. Therefore, all of the options presented are necessary for effective international capital budgeting.

International Capital Budgeting Will Require That Managers ___________