CHAPTER 10

Cross-border Investment Decisions

CHAPTER OBJECTIVES

After studying this chapter, you should be able to:

  1. Discuss the importance of cross-border investment.
  2. Understand the concept of capital budgeting.
  3. Estimate the cash flows associated with a project.
  4. Distinguish between foreign projects and domestic projects in terms of cash flows.
  5. Discuss the approaches to project evaluation.
  6. Gain insight into the risks involved in cross-border investments.
  7. Define various risk-handling techniques.
  8. Understand the concept of real options.

Introduction

Business firms can enter foreign markets through exports, license agreements, investments, strategic alliances, or a combination of these routes. In the case of exports, the exporting firm transfers ...

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