Since the cash flows generated by a foreign target will eventually be converted to the parent's currency, there is no need to consider the foreign exchange rate in the capital budgeting process.

Question

Quizplus · Accepted Answer

The foreign exchange rate should be considered in the capital budgeting process as fluctuations in exchange rates can significantly impact the actual cash flows received by the parent company. Failure to account for this risk may lead to inaccurate analysis of the project's profitability and potential financial losses.

Since the Cash Flows Generated by a Foreign Target Will