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CAPITAL BUDGETING FOR INTERNATIONAL PROJECT INVESTMENT DECISION
What is capital budgeting for international projects?
Capital budgeting for international projects is the process of evaluating and selecting long-term investment opportunities in foreign countries, considering additional risks such as currency fluctuation, political risk, and cross-border regulatory differences.
What is the home currency approach in international capital budgeting?
Convert foreign cash flows to home currency using projected exchange rates.
How does the Adjusted Present Value (APV) method differ from NPV in international capital budgeting?
APV separates the base-case NPV (as if all-equity financed) from the present value of financing side effects such as tax shields and subsidized loans, making it more transparent for international projects with complex financing structures.
What is the foreign currency approach in international capital budgeting?
Discount foreign cash flows at foreign rate, then convert NPV to home currency.
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