How do international factors affect decision making

| November 28, 2016

Question
How do international factors affect decision making? Although the same basic principles of capital budgeting apply to both foreign and domestic operations, there are some key differences. For example, cash flows must be converted into the parent company’s currency, so they are subject to exchange rate risk. In addition, the cost of capital may be different for a foreign project compared with an equivalent domestic project.

For this Assignment, complete Problem 19-17, Parts a, b, and c on page 674 of your course text. This case examines the effects of exchange rates on net present values and rates of return.

In addition to solving for the rates of return from the U.S. and Swiss points of view, write a paragraph that summarizes your key learning points from this case. Be sure to include your calculations as an appendix.

Submit your Application (both your Excel and Word files) by Day 7.

General Guidance on Assignment Length:

Your Assignment, due by Day 7, will typically be 2–3 pages in length as a general expectation/estimate. Refer to the rubric for the Week 7 Assignment for grading elements and criteria. Your Instructor will use the rubric to assess your work.

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