The authors highlight a strong theoretical argument in favor of analyzing any foreign project from the viewpoint of the parent
Provide at least three reasons why the parent's viewpoint is superior to the local viewpoint and give an example of when the local viewpoint fails to maximize the value of the firm.
What will be an ideal response?
Answer: A project might have a positive NPV from the local viewpoint, but fail to consider relevant cash flows from the parent viewpoint. For example, a positive NPV project in one country may result from the erosion of revenues in another. A local manager would not necessarily be expected to be aware of such erosion. It may not be possible to remit all or part of the local cash flows to the parent company and reinvestment opportunities in the local economy may be inferior to what the parent could do elsewhere, thus, a less than maximum use of funds. Political and exchange rate risk add to the uncertainty of cash flows and thus increase the required rate of return by stockholders. Cash flows may be more difficult to estimate especially long-term cash flows in lesser-developed countries.
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In the term linear programming, the word programming comes from the phrase "computer programming."
Indicate whether the statement is true or false
A court may pierce an LLC's veil if A) members fail to provide adequate capital
B) members treat the LLC like a separate organization. C) members keep their assests and the assets of the LLC separate. D) the LLC has too many members.
Pyuish and Vi Kashia file a 1040 jointly. Pyuish earned $37,570 and Vi earned $41,230. The Kashias have three children. Both Pyuish and Vi contributed $2,000 to their IRAs. They had $3,129 in medical and dental expenses. They paid $2,670 in real estate taxes, $1,220 in student loan interest, $4,890 in mortgage interest, and made $3,000 in charitable contributions. What is their taxable income?
Galaxy Corporation purchases specialty software from a software development firm for use in its business as of January 1 of the current year at a cost of $90,000. No hardware was acquired. How much of the cost can Galaxy deduct this year?
A) $18,000 B) $15,000 C) $30,000 D) $90,000