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Question # 00003676
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Updated on: 11/18/2013 12:45 AM Due on: 11/30/2013
Fundamentals of Multinational Finance, 4e (Moffett)Chapter 16 Multinational Capital Budgeting and Cross-Border Acquisitions
Multiple Choice and True/False Questions
16.1 Complexities of Budgeting for a Foreign Project
1) The traditional financial analysis applied to foreign or domestic projects, to determine the project's value to the firm is called ________.A) cost of capital analysisB) capital budgetingC) capital structure analysisD) agency theory
2) Which of the following is NOT a basic step in the capital budgeting process?A) Identify the initial capital invested.B) Estimate the cash flows to be derived from the project over time.C) Identify the appropriate interest rate at which to discount future cash flows.D) All of the above are steps in the capital budgeting process.
3) There are no important differences between domestic and international capital budgeting methods.
4) Which of the following is NOT a reason why capital budgeting for a foreign project is more complex than for a domestic project?A) Parent cash flows must be distinguished from project cash flows.B) Parent firms must specifically recognize remittance of funds due to differing rules and regulations concerning remittance of cash flows, taxes, and local norms.C) There are differing rates of inflation between the foreign and domestic economies.D) All of the above add complexity to the international capital budgeting process.
5) It is important that firms adopt a common standard for the capital budgeting process for choosing among foreign and domestic projects.
16.2 Project versus Parent Valuation
1) Project evaluation from the ________ viewpoint serves some useful purposes and/but should ________ the ________ viewpoint.A) local; be subordinated to; parent'sB) local; not be subordinated to; parent'sC) parent's; be subordinated to; localD) none of the above
2) A foreign firm that is 20% to 49% owned by a parent is called a/an ________.A) subsidiaryB) affiliateC) partnerD) rival
3) For financial reporting purposes, U.S. firms must consolidate the earnings of any subsidiary that is over ________ owned.A) 20%B) 40%C) 50%D) 75%4) Affiliate firms are consolidated on the parent's financial statements on a ________ basis.A) proratedB) 50%C) 75%D) 100%
5) For international investments, relative to project cash flows, parent cash flows are often dependent on the form of financing.
6) Which of the following considerations is NOT important for a parent firm when considering foreign investment?A) the form of financingB) remittance of funds at risk due to political considerationsC) differing rates of national inflationD) All of the above are important considerations.
Multiple Choice and True/False Questions
16.1 Complexities of Budgeting for a Foreign Project
1) The traditional financial analysis applied to foreign or domestic projects, to determine the project's value to the firm is called ________.A) cost of capital analysisB) capital budgetingC) capital structure analysisD) agency theory
2) Which of the following is NOT a basic step in the capital budgeting process?A) Identify the initial capital invested.B) Estimate the cash flows to be derived from the project over time.C) Identify the appropriate interest rate at which to discount future cash flows.D) All of the above are steps in the capital budgeting process.
3) There are no important differences between domestic and international capital budgeting methods.
4) Which of the following is NOT a reason why capital budgeting for a foreign project is more complex than for a domestic project?A) Parent cash flows must be distinguished from project cash flows.B) Parent firms must specifically recognize remittance of funds due to differing rules and regulations concerning remittance of cash flows, taxes, and local norms.C) There are differing rates of inflation between the foreign and domestic economies.D) All of the above add complexity to the international capital budgeting process.
5) It is important that firms adopt a common standard for the capital budgeting process for choosing among foreign and domestic projects.
16.2 Project versus Parent Valuation
1) Project evaluation from the ________ viewpoint serves some useful purposes and/but should ________ the ________ viewpoint.A) local; be subordinated to; parent'sB) local; not be subordinated to; parent'sC) parent's; be subordinated to; localD) none of the above
2) A foreign firm that is 20% to 49% owned by a parent is called a/an ________.A) subsidiaryB) affiliateC) partnerD) rival
3) For financial reporting purposes, U.S. firms must consolidate the earnings of any subsidiary that is over ________ owned.A) 20%B) 40%C) 50%D) 75%4) Affiliate firms are consolidated on the parent's financial statements on a ________ basis.A) proratedB) 50%C) 75%D) 100%
5) For international investments, relative to project cash flows, parent cash flows are often dependent on the form of financing.
6) Which of the following considerations is NOT important for a parent firm when considering foreign investment?A) the form of financingB) remittance of funds at risk due to political considerationsC) differing rates of national inflationD) All of the above are important considerations.
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