The Reasons That the Amount and Timing of the Net

question 25

Multiple Choice

The reasons that the amount and timing of the net cash flows to the foreign subsidiary and parent may differ include:

• A)subsidized loans
• B)differential tax rates
• C)legal and political constraints on cash remittance
• D)all of these

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Definitions:

Compound Annual Real Rate of Return

The rate of return on an investment, adjusted for inflation, that compounds annually, reflecting the true purchasing power of earnings.

Annual Rate of Inflation

The percentage increase in the price of goods and services over a one-year period, indicating the rate at which the purchasing power of money is eroded.

Compounded Quarterly

The process of adding interest to the principal amount of an investment or loan on a quarterly basis, leading to interest on interest.

Equivalent Payment

A method of determining the amount of regular payments that would have the same value as a different payment structure, often used in finance to compare loans or investments.