Parent company in foreign investment analysis are cash flows

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Reference no: EM13922046

Foreign government have certain motivations to restrict the repatriation of earnings of multinational firms to the parent company. This implies that not all earnings and profits generated at the subsidary can be used by the parent company to pay dividends or to reinvest. Thus, from the perspective of the parent company, the relevant cash flows for the parent company in the foreign investment analysis are the cash flows that:

a. the subsidiary firm pays to the foreign government as taxes

b. the subsidiary sends back to the parent company

c. The foreign government repatriates

Reference no: EM13922046

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