Which of the following would most likely cause a company to terminate a project

Question

Which of the following would most likely cause a company to terminate a project in a foreign country. interest rates have declined The MNC's cost of capital has decreased none of the options listed ?exchange rate projections have changed from a depreciation to an appreciation of the foreign currency. the host government has increased its tax rates substantially Which of the following would most likely cause a company to terminate a project in a foreign country. interest rates have declined The MNC's cost of capital has decreased none of the options listed ?exchange rate projections have changed from a depreciation to an appreciation of the foreign currency. the host government has increased its tax rates substantially Which of the following would most likely cause a company to terminate a project in a foreign country. interest rates have declined The MNC's cost of capital has decreased none of the options listed ?exchange rate projections have changed from a depreciation to an appreciation of the foreign currency. the host government has increased its tax rates substantially

Explanation / Answer

The host government has increased its tax rates substantially

If interest rates decline, it means cheaper availability of finance which is beneficial. If the cost of capital decreases, again it means cheaper finance and hence this is not a cause for terminating project in foreign currency. If the foreign currency appreciates it means that the company will benefit since it will gain more foreign currency and this is beneficial to the business.

If the tax rates increase in the host country, this implies lesser profits and hence the company may terminate the project in foreign country

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