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Explain the difference between performing the capital budgeting analysis from the parent firm’s perspective as opposed to the project perspective.
The aim of the financial manager of the parent firm is to maximize its wealth of shareholders. A capital project of a subsidiary of the parent may comprise a positive NPV (or APV) from the subsidiary’s perspective yet comprise a negative NPV (or APV) from the parent’s perspective if fixed cash flows cannot be repatriated to the parent due to remittance restrictions by the host country, or if the home currency is supposed to appreciate substantially over the life of the project, yielding unattractive cash flows while converted into the home currency of the parent. In addition, a higher tax rate in the home country may cause the project to be unbeneficial from the parent’s perspective. Any of these causes could result in the project being unattractive to the parent and the parent’s stockholders.
Determine The key factor affecting financing Costs Because cost of capital is measured under the assumption that both firm's asset structure and its capital (financial) structu
On 1 July 2006, Goela Ltd was registered and offered 1 000 000 ordinary shares to the public at an issue price of $1.70, payable as follows: 50c on application (due 31 August)
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Define the term in brief -Called-up share capital Called-up share capital that you may find in some of balance sheets. It refers to that part of subscribed capital, which share
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Under what circumstances would market to book value ratios be misleading? Explain. The Market to Book ratio is helpful, but it is just only a rough approximation of how liquid
D esign, Drawing and Bill of Quantities (BOQ) for works We discussed about INCO terms which are set standards for the project. Now let us learn about other parameters for cont
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