Why are _____ cash flows important and how do you calculate them? Fixed costs are important because they remain constant. They are calculated by summing all fixed expenses. Sunk costs are important because they reflect past expenditures. They are calculated by adding all past costs. Incremental cash flows are important because they reflect the net additional cash flows generated by a project. They are calculated by subtracting the firm's cash flows without the project from the cash flows with the project. Variable costs are important because they change with production levels. They are calculated by multiplying unit cost by quantity.

Incremental cash flows are important because they reflect the net additional cash flows generated by a project. They are calculated by subtracting the firm's cash flows without the project from the cash flows with the project.

International Finance: Cash Flow Analysis and Capital Budgeting for Multinationals

Flashcard

Learn Mode

Match

Library

Create

Flashcards

Library

Match (Coming Soon)

Finance - Personal Finance

andrsonztdc Created by 10 mon ago

Cards in this deck(38)

Which cash flows are relevant when considering _____ cash flows?

Why are _____ cash flows important and how do you calculate them?

The _____ for a given investment is the minimum risk-adjusted return required by shareholders for taking the investment.

The value of the MNC is calculated by summing all of the discounted future cash flows at its _____ of capital.

When determining WACC, should you use _____ or book values?

If I have real cash flows, which _____ rate do I use?

If I have foreign cash flows, I use which _____ rate?

How should revenues and costs be measured? They should be measured on an _____, after-tax, cash-flow basis.

Free cash flows of a project are calculated as after-tax, incremental operating earnings from the project plus non-cash accounting charges like _____ minus investments like CAPEX and Net WC.

Why do we like NPV so much? It measures the change in _____ value.

Leverage is related to fixed assets. How does leverage affect a firm's _____?

Leverage is related to non-debt tax shields. Firms with more non-debt tax shields will use _____ debt because they don't need those.

Leverage is related to firm size. The larger the firm, the more _____ in its capital structure.

Leverage is related to earnings volatility. Higher earnings volatility increases the chance of _____.

Leverage is related to operating risk. Higher operating risk increases the chance of _____.

Leverage is related to profitability. More profitable firms have more _____ generated funds.

Leverage is related to growth opportunities. It is _____ related to capital structure.

Leverage is related to R&D intensity. Higher R&D intensity leads to _____ debt due to information asymmetry.

Leverage is positively related to which factors? _____ assets and firm size.

Leverage is negatively related to which factors? Non-debt tax shields, earnings volatility, operating risk, profitability, growth opportunities, and _____ intensity.

According to Rajan and Zingales, the same factors that affect leverage here affect it in other _____ countries.

A progressive tax rate means the more income you earn, the more you _____.

Hedging is relevant in _____ markets.

Hedging is useful when there's convexity to the tax code. This includes progressive tax rates, tax loss carry-forwards, alternative minimum taxes, and investment tax _____.

Tax benefits of hedging are larger if the tax code is more _____, the firm's pre-tax income is more volatile, and more of the firm's income occurs in the convex region of the tax code.

The assumptions behind Modigliani and Miller include no transaction costs, no taxes, no financial distress costs, rational investors, and equal access to _____ information.

According to Modigliani and Miller, corporate financial policies do not change the value of the firm's assets unless they lower firm's taxes, affect its investment decisions, or can be done more cheaply than investors due to lower _____ costs.

Modigliani and Miller's findings without taxes suggest that capital structure is _____ and has no impact on the value of the firm.

Modigliani and Miller's findings with taxes suggest that the value of the firm with debt will increase relative to the firm with no debt because debt provides a _____ shield.

The trade-off theory highlights the good and the bad of leverage. The good is tax shields, and the bad is the probability of _____.

According to signaling theory, issuing stock signals that the stock is _____.

Information asymmetry is likely in firms that rely heavily on intangibles like R&D because revealing their sources of income could harm their competitive _____.

The pecking order of financing starts with internal funds, followed by debt, convertible debt, and finally _____.

The pecking order is structured from the lowest cost to the highest cost of _____.

You can use WACC for a capital budgeting project if the project risk is the same as the firm's overall risk and the project is financed using debt and equity in the same debt-equity mix as the firm's target capital _____.

Debt can help a firm by providing a _____ shield.

The cost of equity is the market's required rate of return on the firm's _____.

What type of companies will have less systematic risk? _____ companies.

Ask Our AI Tutor

Get Instant Help with Your Questions

Need help understanding a concept or solving a problem? Type your question below, and our AI tutor will provide a personalized answer in real-time!

How it works

Ask any academic question, and our AI tutor will respond instantly with explanations, solutions, or examples.

Get Started

Browse questions and discover topic-based flashcards
Practice with engaging flashcards designed for each subject
Strengthen memory with concise, effective learning tools

Discover By Topic

International Finance: Cash Flow Analysis and Capital Budgeting for Multinationals

Related Decks