Question: Using a specific firm as a concrete example, how can the following affect the capital budgeting decisions of the multinational company you selected? Exchange rate

Using a specific firm as a concrete example, how can the following affect the capital budgeting decisions of the multinational company you selected?

  • Exchange rate risk
  • Political risk
  • Tax law differences
  • Transfer pricing
  • A strategic rather than a strict financial viewpoint

For the firm you selected, consider the following:

  • Which of the above would be the most important consideration? Why?
  • How might these ideas differ if the firm you chose were part of a different industry?
  • How might these your ideas change with a small business seeking to engage in multinational commerce?
  • What specific capital budgeting factors would discourage a firm from entering multinational commerce? Why? Provide a concrete example.

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