Today, we learned about capital budgeting with respect to the global market. When evaluating capital budgeting domestically, one can simply calculate the Net Present Value of long-term investments with fixed assets to evaluate on whether or not to undertake the investment. However, there are other factors for Multinational Corporations to account for when making international investments such as: exchange rates, tax differences, and overall riskiness. The Adjusted Present Value Model more effectively includes these factors into the calculation. The project will be accepted if it is greater-than or equal-to zero (0). However, if the investment is less than zero (0), then the project should not be undertaken.
At the end of class, we reviewed for the final. It should be a fun one, so I will be studying for the remainder of the week.
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