Can an investment project of a foreign subsidiary that has a positive net present value when evaluated as a stand-alone firm ever be rejected by the parent corporation? Assume that the parent accepts all projects with positive adjusted net present values

What will be an ideal response?

Answer: Yes, we know that countries impose withholding taxes on the dividends that are repatriated from subsidiaries to parent corporations. These taxes lower the value of the project to the parent. The parent must also be aware of the possibility of future problems accessing the foreign exchange market from the subsidiary's country. In general, political risk could be different for a subsidiary of a multinational corporation versus a local stand-