Tom and Anthony Are Both U

question 140

Multiple Choice

Tom and Anthony are both U.S. citizens. Tom buys construction machinery from a company in Canada to use for his U.S construction company. Anthony opens a cafe in Portugal. Whose action is an example of U.S. foreign direct investment

• A)Tom's but not Anthony's.
• B)Anthony's but not Tom's.
• C)Anthony's and Tom's.
• D)Neither Anthony's nor Tom's.

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Definitions:

Terminal Value

The value of an investment or project at the end of a forecast period, considering all future cash flows as a single lump sum value.

FCFF

Free Cash Flow to the Firm (FCFF) is a measure of a company's financial performance that shows how much cash is available for distribution among all securities holders after paying taxes, reinvesting in the business, and meeting working capital needs.

FCFE

Free Cash Flow to Equity, a measure of how much cash can be paid to equity shareholders of the company after all expenses, reinvestment, and debt repayments.

Price-to-Book Ratio

A valuation metric comparing a company's current market price to its book value.