Discounted cash flow Essays

Discounted cash flow Essays Discounted cash flow Essay Discounted cash flow Essay What Is a capital Investment? Using money to buy goods or services issuing shares of stock of the corporation authorizing and issuing shares of common stock by a multinational corporation committing resources to projects that have costs and benefits well into the future Correct! Question 2 Estimating the expected cash inflows and outflows from proposed projects is performed in what step of the capital budgeting process? Estimating the expected cash inflows and outflows from proposed projects is performed in what step of the capital budgeting process? Eject identification project evaluation project monitoring project review Question 3 Which capital budgeting technique Is preferred In all major Industrialized countries? Net present value internal rate of return payback period none of the above Question 4 Why is it believed that Japanese companies prefer the payback period over the discounted cash flow methods for evaluating capital investment alternatives? Why i s it believed that Japanese companies prefer the payback period over the discounted cash flow methods for evaluating capital investment alternatives? It is consistent with their corporate strategy of investing in new technology. Japanese companies compete using very short product life cycles. Cash flows over a long period of time are difficult to predict with much accuracy. All of the above Question 5 Why is the multinational capital budgeting process more complex than capital budgeting in a domestic environment? Why is the multinational capital budgeting process more complex than capital budgeting in a domestic environment? Cash flows must be predicted. An appropriate discount rate must be selected. There are additional risks involved. The payback period is shorter. Question 6 Clamps Co. Is considering building a manufacturing facility in Country Z, which has changed it labor laws frequently and dramatically in the past decade. What kind of risk is created by these legislative actions? Clamps Co. Is considering building a manufacturing facility in Country Z, which has changed it labor laws frequently and dramatically in the past decade. What kind of risk is created by these legislative actions? Physical risk political risk financial risk economic risk Question 7 Hyperinflation causes what kind of risk for a multinational corporation? Question 8 The possibility of loss due to unexpected changes in currency values or interest rates is called: The possibility of loss due to unexpected changes in currency values or interest rates is called: business risk Question 9 Cash flows related to a proposed capital investment project are subject to what kind of risk? Cash flows related too proposed capital investment project are subject to what kind of risk? All of the above Question 10 0/2 puts Skip to question text. Johnson Ltd determined that the net present value of an investment in technological improvements at its plant in France would be ?10,000,000 if pending litigation was resolved in the companys favor and would be ?2,000,000 if the courts ruled against the company. Johnnys attorneys in France assessed the probability of a favorable ruling at 70%. What is the expected net present value of the project? You Answered Correct Answer Question 1 1 Why is management control particularly complex in decentralized multinational organizations? Why is management control particularly complex in decentralized litigation organizations? Managers abroad are not as well-trained as managers of domestic operations. Decision-making authority is not delegated to the local managers of foreign operations. Managers of foreign operations may be motivated by local goals rather than parents goals. Financial risks are always higher for the local managers of foreign operations than for managers of domestic operations. Question 12 Under what condition should the gain or loss from translating foreign currency profit of subsidiary into the parents home currency be included in the subsidiarys assure of performance? Under what condition should the gain or loss from translating foreign currency profit of subsidiary into the parents home currency be included in the subsidiarys measure of performance? If the subsidiary manager is authorized to hedge the translation exposure if there is a translation gain, but not if there is a translation loss if the multinational corporation is using the same method of translation for performance evaluation as it does for financial reporting