CAPITAL BUDGETING FOR MUTINATIONAL CORPORATION: HOW TO DO AND CONSIDER MAJOR RISK FACTORS
Keywords:Capital Budgeting for Multinational Corporation
Currently, many countries in the world are gathered in groups. There are several groups such as ASEAN (Association of South East Asian Nations), EU (European Union) etc., to create bargaining power of trade and economic against other groups. This makes cooperation among countries in the same group, resulting in the movement of capital from one country in another country. However, the more investments across the country need to carefully consider the several factors rather than investing in their own countries. Thus, this academic article aims to present the process of planning for investing in another country which is so-called that capital budgeting for Multinational Corporation by consideration in view of the parent company that invests to set up a subsidiary company in other countries. Besides that, the article also shows the key risk factors that affect investment in multinational companies with respect to fluctuations of exchange rates, the risk of the investments that affect the returns of the investment and a discount rate of investment project analysis including rules governing the repatriation of earnings to the parent company. The article displays examples analyzing the capital budgeting for multinational investments in various aspects of important risk factors mentioned explicitly.
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