Question: Two methods were discussed to evaluate a foreign capital budgeting project for a MNC's. Which was not one of these? a. Estimate future cash flows
Two methods were discussed to evaluate a foreign capital budgeting project for a MNC's. Which was not one of these?
| a. | Estimate future cash flows in foreign currency; convert to the home currency at the predicted exchange rate; calculate NPV using the home currency cost of capital. | |
| b. | Estimate future cash flows in foreign currency; convert to the home currency at the predicted exchange rate; calculate NPV using the foreign currency cost of capital. | |
| c. | Estimate future cash flows in the foreign currency; estimate the foreign currency discount rate; calculate the foreign currency NPV using the foreign cost of capital; translate the foreign currency NPV into dollars using the spot exchange rate. |
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