The decision-making process for a company's reinvestment choices is often different from those for new investment choices because ________.
A) internal rate of return and other financial measurement criteria are more difficult to compile and analyze on existing operations, given currency translation distortions
B) failure to support an existing investment may jeopardize the firm's operations and competitiveness in that country
C) most of the net value of foreign investment comes from new international capital transfers rather than from reinvestment of earnings abroad
D) corporate management feels that country managers are best able to make divestment decisions

Question

Quizplus · Accepted Answer

When a company is making reinvestment choices, it already has an existing investment in the country. Therefore, failure to support the existing investment may create operational and competitiveness issues for the company. In contrast, when making new investment choices, the company has more flexibility and can decide whether to invest in a new country or not.

The Decision-Making Process for a Company's Reinvestment Choices Is Often