List some key differences in capital budgeting as applied to foreign
versus domestic operations.
What are the relevant cash flows for an international investment—
the cash flows produced by the subsidiary in the country where it
operates or the cash flows in dollars that it sends to its parent
company?
Why might the cost of capital for a foreign project differ from that of
an equivalent domestic project? Could it be lower?
What adjustments might be made to the domestic cost of capital for
a foreign investment due to exchange rate risk, political risk, and
country risk?
