国际财务管理17.pptVIP

Chapter Outline Review of Domestic Capital Budgeting The Adjusted Present Value Model Capital Budgeting from the Parent Firm’s Perspective Risk Adjustment in the Capital Budgeting Process Sensitivity Analysis Real Options Review of Domestic Capital Budgeting 1. Identify the SIZE and TIMING of all relevant cash flows on a time line. 2. Identify the RISKINESS of the cash flows to determine the appropriate discount rate. 3. Find NPV by discounting the cash flows at the appropriate discount rate. 4. Compare the value of competing cash flow streams at the same point in time. Review of Domestic Capital Budgeting The basic net present value equation is Review of Domestic Capital Budgeting The NPV rule is to accept a project if NPV ? 0 Review of Domestic Capital Budgeting For our purposes it is necessary to expand the NPV equation. Review of Domestic Capital Budgeting For our purposes it is necessary to expand the NPV equation. Review of Domestic Capital Budgeting We can use The Adjusted Present Value Model Can be converted to adjusted present value (APV) The Adjusted Present Value Model The APV model is a value additivity approach to capital budgeting. Each cash flow that is a source of value to the firm is considered individually. Note that with the APV model, each cash flow is discounted at a rate that is appropriate to the riskiness of the cash flow. Capital Budgeting from the Parent Firm’s Perspective Donald Lessard developed an APV model for a MNC analyzing a foreign capital expenditure. The model recognizes many of the particulars peculiar to foreign direct investment. Capital Budgeting from the Parent Firm’s Perspective The operating cash flows must be translated back into the parent firm’s currency at the spot rate expected to prevail in each period. Capital Budgeting from the Parent Firm’s Perspective OCFt represents only the portion of operating cash flows available for remittance that can be legally remitted to the parent firm. Capital Budgeting from the