国际财务管理英文11

MultinationalCapitalBudgetingMultinationalCapitalBudgeting1111ChapterChapter2009ChapterObjectives„TocomparethecapitalbudgetinganalysisofanMNC’ssubsidiarywiththatofitsparent;„Todemonstratehowmultinationalcapitalbudgetingcanbeappliedtodeterminewhetheraninternationalprojectshouldbeimplemented;and„Toexplainhowtheriskofinternationalprojectscanbeassessed.SubsidiaryversusParentPerspective„Shouldthecapitalbudgetingforamulti-nationalprojectbeconductedfromtheviewpointofthesubsidiarythatwilladministertheproject,ortheparentthatwillprovidemostofthefinancing?„Theresultsmayvarywiththeperspectivetakenbecausethenetafter-taxcashinflowstotheparentcandiffersubstantiallyfromthosetothesubsidiary.SubsidiaryversusParentPerspectiveThedifferenceincashinflowsisdueto:„Taxdifferentials…Whatisthetaxrateonremittedfunds?„Regulationsthatrestrictremittances„Excessiveremittances…Theparentmaychargeitssubsidiaryveryhighadministrativefees.„ExchangeratemovementsOnlineApplication„Forcountry-specificinformationsuchasgeneralbusinessrules,regulationsandtaxrates,visit:…thePriceWaterhouseCooperssiteat……(Deloitte&Touche-DTT；Ernst&Young)14.1ProcessofRemittingSubsidiaryEarningstoParent„Aparent’sperspectiveisappropriatewhenevaluatingaproject,sinceanyprojectthatcancreateapositivenetpresentvaluefortheparentshouldenhancethefirm’svalue.„However,oneexceptiontothisrulemayoccurwhentheforeignsubsidiaryisnotwhollyownedbytheparent.SubsidiaryversusParentPerspectiveInputforMultinationalCapitalBudgetingThefollowingforecastsareusuallyrequired:1.Initialinvestment2.Consumerdemand3.Productprice4.Variablecost5.Fixedcost6.Projectlifetime7.Salvage(liquidation)value8.Fund-transferrestrictions9.Taxlaws10.Exchangerates11.Requiredrateofreturn„Whatistheexpectedeconomicgrowthrateforaparticularcountry?OnlineApplication…ConsulttheCountryCommercialGuidespreparedbyembassystaffat…RefertotheCIA’sWorldFactbookat(CIA:CERTIFIEDINTERNALAUDITOR）MultinationalCapitalBudgeting„Capitalbudgetingisnecessaryforalllong-termprojectsthatdeserveconsideration.„Onecommonmethodofperformingtheanalysisistoestimatethecashflowsandsalvagevaluetobereceivedbytheparent,andcomputethenetpresentvalue(NPV)oftheproject.MultinationalCapitalBudgeting„NPV=–initialoutlayn+Σcashflowinperiodtt=1(1+k)t+salvagevalue(1+k)nk=therequiredrateofreturnontheprojectn=projectlifetimeintermsofperiods„IfNPV0,theprojectcanbeaccepted.CapitalBudgetingAnalysisPeriodt1.Demand(1)2.Priceperunit(2)3.Totalrevenue(1)×(2)=(3)4.Variablecostperunit(4)5.Totalvariablecost(1)×(4)=(5)6.Annualleaseexpense(6)7.Otherfixedperiodicexpenses(7)8.Noncashexpense(depreciation)(8)9.Totalexpenses(5)+(6)+(7)+(8)=(9)10.Before-taxearningsofsubsidiary(3)–(9)=(10)11.Hostgovernmenttaxtaxrate×(10)=(11)12.After-taxearningsofsubsidiary(10)–(11)=(12)CapitalBudgetingAnalysisPeriodt13.Netcashflowtosubsidiary(12)+(8)=(13)14.Remittancetoparent(14)15.Taxonremittedfundstaxrate×(14)=(15)16.Remittanceafterwithheldtax(14)–(15)=(16)17.Salvagevalue(17)18.Exchangerate(18)19.Cashflowtoparent(16)×(18)+(17)×(18)=(19)20.Investmentbyparent(20)21.Netcashflowtoparent(19)–(20)=(21)22.PVofnetcashflowtoparent(1+k)–t×(21)=(22)23.CumulativeNPVΣPVs=(23)FactorstoConsiderinMultinationalCapitalBudgetingnExchangeratefluctuations.Differentscenariosshouldbeconsideredtogetherwiththeirprobabilityofoccurrence.oInflation.Althoughprice/costforecastingimplicitlyconsidersinflation,inflationcanbequitevolatilefromyeartoyearforsomecountries.pFinancingarrangement.Financingcostsareusuallycapturedbythediscountrate.However,manyforeignprojectsarepartiallyfinancedbyforeignsubsidiaries.qBlockedfunds.Somecountriesmayrequirethattheearningsbereinvestedlocallyforacertainperiodoftimebeforetheycanberemittedtotheparent.FactorstoConsiderinMultinationalCapitalBudgetingrUncertainsalvagevalue.Thesalvagevaluetypicallyhasasignificantimpactontheproject’sNPV,andtheMNCmaywanttocomputethebreak-evensalvagevalue.sImpactofprojectonprevailingcashflows.Thenewinvestmentmaycompetewiththeexistingbusinessforthesamecustomers.tHostgovernmentincentives.Theseshouldalsobeconsideredintheanalysis.AdjustingProjectAssessmentforRisk„IfanMNCisunsureofthecashflowsofaproposedproject,itneedstoadjustitsassessmentforthisrisk.„Onemethodistousearisk-adjusteddiscountrate.Thegreatertheuncertainty,thelargerthediscountratethatisapplied.„Manycomputersoftwarepackagesarealsoavailabletoperformsensitivityanalysisandsimulation.14.4SensitivityoftheProject’sNPVtoDifferentExchangeRateScenarios:Spartan,Inc.ImpactofMultinationalCapitalBudgetingonanMNC’sValue()()[]()∑∑⎪⎪⎭⎪⎪⎬⎫⎪⎪⎩⎪⎪⎨⎧+×=nttmjtjtjk1=1,,1ERECFE=ValueE(CFj,t)=expectedcashflowsincurrencyjtobereceivedbytheU.S.parentattheendofperiodtE(ERj,t)=expectedexchangerateatwhichcurrencyjcanbeconvertedtodollarsattheendofperiodtk=weightedaveragecostofcapitaloftheparentMultinationalCapitalBudgetingDecisions„SubsidiaryversusParentPerspective…TaxDifferentials…Restric