capital budgeting problems for multinational corporations
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1. Which of the following represent capital budgeting problems for multinational corporations but not for domestic corporations?
a. determining the cost of capital
b. calculating after tax cash flows
c. selecting the appropriate risk-adjusted rates of return
d. none of the above
I think it is B?
2. When cost externalities exist, an optimal equilibrium can be attained if the government...
a. restricts production
b. levies a tax for the difference between private costs and social costs
c. prohibits production
d. both a and b
I think it is D?
The Coase theorem states that in the presence of the cost externalities an optimal equilibrium can be attained:
a. with government taxation
b. by prohibiting production
c. by correctly defining property rights and through negotiation between parties
d. by lessening production
I think it is D?
One school of anti-trust thought argues that rather than ensuring efficiency anti-trust laws are really aimed at:
a. protecting small independent firms against large corporations
b. outlawing all monopolies whether they perform "bad acts" or not
c. Price differentiation due to difference in quality and cost
d. restricting interlocking directorates
I think it is A?
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Solution Summary
Scenarios representing capital budgeting problems for multinational corporations but not for domestic corporations
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1. Because of the greater variety of financial tools available to MNCs, their cost of capital tends to be lower. However, the complications of calculating the cost of capital are very ...
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