An investment in a foreign subsidiary is estimated to have a positive NPV after the discount rate used in the calculations is adjusted for political risk and any advantages from diversification. Does this mean the project is acceptable? Why or why not?
Answer to relevant QuestionsHow do financial cash flows and the accounting statement of cash flows differ? Which is more useful for analyzing a company? Calculating OCF Ranney, Inc., has sales of $18,700, costs of $10,300, depreciation expense of $1,900, and interest expense of $1,250. If the tax rate is 40 percent, what is the operating cash flow, or OCF? During the year, the Senbet Discount Tire Company had gross sales of $1.06 million. The firm’s cost of goods sold and selling expenses were $525,000 and $215,000, respectively. Senbet also had notes payable of $800,000. ...For 2012, calculate the cash flow from assets, cash flow to creditors, and cash flow to stockholders.Use the following information for Ingersoll, Inc., for (assume the tax rate is 34percent):If a U.S. firm raises funds for a foreign subsidiary, what are the disadvantages to borrowing in the United States? How would you overcome them?
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