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Applied International Finance II, Second Edition by Thomas O'Brien

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CHAPTER 6

International Capital Budgeting Applications

The previous chapter’s coverage of cross-border valuation featured two basic types of international capital budgeting applications: the acquisition and sale of a foreign operation. This chapter looks at some additional international capital budgeting scenarios: (a) a plant modernization proposal by an overseas subsidiary; and (b) a proposal to relocate some or all of production from the home country to a foreign country, or vice versa, considering possible changes in political risk or FX operating exposure. The relocation scenarios may be adapted to a company decision on whether to locate production in the home country or a foreign country.

Foreign Direct Investment

A multinational will make ...

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