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CHP 5 Int Operations and International Investment Apprasal (B)
CHP 5 Int Operations and International Investment Apprasal (B)
CHP 5 Int Operations and International Investment Apprasal (B)
investment appraisal
Skills required
• Forecast project in any specific currency and determines
the project’s NPV
• Assess the impact of a project upon a firm’s exposure to
translation. Transaction and economic risk
• Costs and benefits of sources of finance within the
international equity and bond market
EECB 423
International operations and international
investment appraisal
Foreign projects and investment appraisal
Steps
Identifying relevant cash flows
Calculate a project’s corporate tax liability inclusive tax relief
on capital expenditure
Dealing with inflation and distinguishing money and real cash
flows
Double taxation
Remittance restrictions
Forecasting future spot rates (inflation/interest rates)
EECB 423 7
International operations and international investment
appraisal
NPV analysis for foreign projects
Steps
1 Estimate the project cash flow
Ex Kaplan pg 210
Ex Kaplan pg 210