What Is a Greenfield Investment? How Does It Compare to an Acquisition

question 12

Essay

What is a greenfield investment? How does it compare to an acquisition? Which form of FDI is a firm more likely to choose? Explain your answer.

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Definitions:

Straight-Line

A technique for computing an asset's depreciation by distributing its cost evenly across each year of its expected useful life.

Double-Declining-Balance Method

An accelerated depreciation method that doubles the book value of an asset to calculate annual depreciation expense.

Residual Value

The approximated value of an asset at the conclusion of its period of utility.

Depreciation

Systematically dividing the cost of a tangible asset across the years it is expected to last.