Which of the Following Is Characteristic of the Parent's Perspective

question 34

Multiple Choice

Which of the following is characteristic of the parent's perspective in capital budgeting?

• A) It estimates future cash flows from the project in the functional currency.
• B) It adds the subsidiary's after-tax operating cash flows with the project's cost of capital.
• C) It seldom uses the currency of the primary economic environment in which it operates.
• D) It estimates the incremental after-tax operating cash flows in the subsidiary's local currency.

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Definitions:

Centralized

The concentration of decision-making authority at the top levels of the organizational hierarchy.

Decentralized

A type of organizational structure where decision-making authority is distributed throughout various levels rather than being concentrated at the top.

Flatter Organizational Structure

A type of organizational design with fewer levels of middle management to promote faster decision-making, increased flexibility, and more employee autonomy.

Formal Hierarchy

An organizational structure where individuals are ranked according to levels of authority and responsibility, often visually represented as a pyramid.