Exam 16: Additional Topics in International Capital Budgeting

Another name for the reinvestment ratio is the ________ ratio.

Because the cash flows from an international project may be denominated in different currencies from the headquarters,one of the very first decisions is to

Growth does lead to increases in the firm's value,but only if the ________ exceeds the WACC does the firm's value increase by more than the amount of the investment.

The change in a firm's future operating profit is another way to state its increase in ________.

The ________ is the change in a firm's future operating profit divided by its investment.

________ is the capital budgeting approach that finds the value of the leveraged firm by discounting forecasts of all-equity free cash flows with a weighted average of the required rates of return to the firm's debt and equity.

One way cash flows from foreign projects can be forecast is to forecast the future foreign currency cash flows,discount them to the present using an appropriate foreign currency discount rate,and then multiply the present value denominated in the foreign currency by the current ________ between the two currencies.

Assuming an upward-sloping term structure of spot interest rates,if the expected profits from a foreign project are discounted by a higher discount rate found in later years,the ________ of the project is penalized needlessly.

What is the name given to the ratio of investment to gross cash flows?

What is the most important reason to consider real currency appreciation and depreciation forecasts when doing an international capital budgeting analysis?

Explain how to calculate the rate of return on invested capital?

The managers of Apex International accepted a high-variance,low-value project rather than a low-variance,high-value project.When this occurs,mangers are said to have engaged in ________.