In the Financing of a Foreign Affiliate, the Simplest and Most

question 86

True/False

In the financing of a foreign affiliate, the simplest and most common arrangement is a direct loan from the parent company to the subsidiary.

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Definitions:

Hurdle Rates

The minimum acceptable rate of return on an investment that a manager or company is willing to accept before starting a project.

Carrying Amount

The book value of an asset as recorded in the accounting records, considering any depreciation or amortization.

Tax Purposes

The rationale or basis for certain financial decisions or calculations made in compliance with tax laws.

Net Present Value (NPV)

A profitability measure for an investment that involves deducting the present value of cash expenditures from the present value of cash receipts throughout a certain timeframe.