When Assessing a German Project Administered by a German Subsidiary

question 50

Multiple Choice

When assessing a German project administered by a German subsidiary of a U.S.-based MNC solely from the German subsidiary's perspective, which variable will most likely influence the capital budgeting analysis?

• A) the withholding tax rate
• B) the euro's exchange rate
• C) the U.S. tax rate on earnings remitted to the United States
• D) the German government's tax rate
• E) the withholding tax rate AND the U.S. tax rate on earnings remitted to the United States

---

Definitions:

Safety Stock

Additional inventory held to protect against uncertainties in demand or supply, ensuring sufficient stock is available to meet customer needs.

Service Level

A measure of the quality of service provided, often defined as the percentage of customer demands that are met on time.

Reorder Period

The time interval between placing orders for inventory replenishment to ensure consistent supply without incurring stockouts or excessive holding costs.

Safety Stock

Inventory kept on hand to protect against fluctuations in demand or supply, ensuring that there are sufficient units available to meet customer needs.