Which of the following statements is true? Question 16 options: a) In order to c

Question

Which of the following statements is true?

Question 16 options:

a) In order to compensate for the effects of inflation, nominal cash flows should be discounted with a real discount rate. b) Developing countries sometimes require that foreign companies investing capital locally take on additional development or infrastructure projects c) Project-specific expropriation risk has no effect on expected future cash flows from a project, but can increase the discount rate d) Blocked funds are cash flows generated by a foreign project that are not immediately repatriated to the parent because the project has better opportunities than the parent corporation.

Explanation / Answer

In order to compensate for the effect of inflation, nominal cash flows should be discounted with a real discount rate is false because nominal (real) cash flows must be discounted with a nominal (real) discount rate. It is true that Developing countries sometimes require that foreign companies investing capital locally take on additional development or infrastructure projects. Project –specific expiration risk has no effect on expected future cash flows from a project, but can increase the discount rate is false because project specific expiration risk do influence cash flow but do not affect the discount rate. Blocked funds are cash generated by a foreign project that are not immediately repatriated to the parent because the project has better opportunities than the parent corporation .It is false because blocked funds means those funds which are blocked due to restrictions imposed by host governments.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.