If we accept the MNE objective of minimizing the consolidated cost of capital then

Question

Quizplus · Accepted Answer

Accepting the MNE objective of minimizing the consolidated cost of capital means that the overall objective is to minimize the cost of capital at the MNE level. This implies that the subsidiary's cost of capital is relevant only to the extent that it affects this overall goal. Consequently, the objective of minimizing the cost of capital for each individual subsidiary may not be appropriate. Also, since minimizing the consolidated cost of capital is the ultimate goal, the value of the MNE as a whole should be maximized. Thus, all of the choices A, B, and C are correct.

If We Accept the MNE Objective of Minimizing the Consolidated