Which of the following conditions is most likely to expose the free cash flows of a project
Question:
A. Inputs to the project (e.g. raw materials) and outputs (e.g. sales) are both denominated in one currency, but profits are taxed based on the tax rate in a different country.
B. Inputs to the project (e.g. raw materials) and outputs (e.g. sales) are both denominated in one currency, but capital has been borrowed in a different currency and is subject to the prevailing interest rate for that currency.
C. Inputs to the project (e.g. raw materials) are denominated in one currency, while outputs (e.g. sales) are denominated in a different currency.
D. Inputs to the project (e.g. raw materials) and outputs (e.g. sales) are both denominated in one currency, but profits then need to be repatriated to the parent company's country and converted to parent company's currency.
Auditing and Assurance Services
ISBN: 978-0077862343
6th edition
Authors: Timothy Louwers, Robert Ramsay, David Sinason, Jerry Straws