For purposes of international capital budgeting, which of the following statements is NOT true?
A) Managers must evaluate political risk because political events can drastically reduce the value or availability of expected cash flows.
B) Parent cash flows must be distinguished from project cash flows. Each of these two types of flows contributes to a different view of value.
C) An array of nonfinancial payments can generate cash flows from subsidiaries to the parent, including payment of license fees and payments for imports from the parent.
D) All of the above are true statements.
Answer: D
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There is a rumor in your organization that layoffs are inevitable. Which of the following is not suggested by your text as a way to reduce the negative consequences of rumors?
A) Explain decisions that may appear inconsistent or secretive. B) Ignore the rumor. C) Emphasize the downside, as well as the upside, of current decisions and future plans. D) Openly discuss worst case possibilities.