Briefly explain how the following items affect the capital budgeting decisions of multinational companies (a) Exchange rate risk (b) Political risk (c) Tax law differences (d) Transfer pricing and (e) A strategic, rather than a strict, financial viewpoint ...

a Multinational companies MNCs must consider the effect of exchange rate risk the risk that the exchange rate between the dollar and the currency in w ...

Briefly explain how the following items affect the capital budgeting decisions of multinational companies: (a) Exchange rate

Question:

Briefly explain how the following items affect the decisions of multinational companies:
(a) risk;
(b) Political risk;
(c) Tax law differences;
(d) Transfer pricing; and
(e) A strategic, rather than a strict, financial viewpoint.

Capital Budgeting
Capital budgeting is a practice or method of analyzing investment decisions in capital expenditure, which is incurred at a point of time but benefits are yielded in future usually after one year or more, and incurred to obtain or improve the... Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...