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Question;Essay Questions;16.1 Complexities of Budgeting for a Foreign;Project;1) Explain how;political risk and exchange rate risk increase the uncertainty of international;projects for the purpose of capital budgeting.;16.2 Project versus Parent Valuation;1) The authors;highlight a strong theoretical argument in favor of analyzing any foreign;project from the viewpoint of the parent. Provide at least three reasons why;the parent's viewpoint is superior to the local viewpoint and give an example;of when the local viewpoint fails to maximize the value of the firm.;countries.;16.3 Illustrative Case: Cemex Enters Indonesia;1) Capital;budgeting typically requires some type of sensitivity analysis. In the case of;international capital budgeting from the project perspective, analysts consider;political risk, foreign exchange risk and foreign exchange risk. Identify and;discuss the important aspects of these two types of risk considerations.;5.Whether;the future cash flows are forgone.;16.4 Real Option Analysis;1) What is real;option analysis? How does it differ from the discounted cash flow approach to;project evaluation? Why do some decision-makers prefer the real option approach;over the DCF approach?;16.5 Project Financing;1) What is;project financing and what are the factors critical to its success?;16.6 Cross-Border Mergers and Acquisitions;1) Compared to a;greenfield investment, list advantages and disadvantages of a cross-border;merger or acquisition.


Paper#51289 | Written in 18-Jul-2015

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