Country Risk incorporating into capital budgeting 1
Country Risk incorporating into capital budgeting 8
Foreign Direct Investment is an investment that a multinational corporation makes in a host country where they act as a parent company and have control and earn a private return. The collaboration between companies, the cross-border partnership can facilitate long-term business solutions. Foreign firms through geographic diversification can safeguard themselves from supply chain disruption and can enhance the economic prospects of both host country and parent country. One of the perplexing issues faced in international business lies within the political and financial risk in project investment. Political risk can be defined as the risk which affects the cash flow of any company dealing in international business and investment which is affected by a change in government action. A subject matter of paradox gets its exposure when several authors and scholars vouch for the way capital budgeting is explained and practiced. The general observation in a corporate finance world is the increase in the value of shareholders with NPV being positive. The project cash flow can be forecasted followed by discounting method at a discounting rate to reflect the price that the capital market is charging for the risk in cash flow; hence the derivation for NPV (Guo & Zheng,2020). The investors only consider the systematic risk of the project while ignoring the imperfection that is captured in the capital market in the case of capital budgeting. It is also believed that that quantification of the political risk is a difficult task even for investors.
In this paper, we will explore the country's risk in a broader aspect and incorporate it with the concepts of capital budgeting. It will also contain empirical evidence of FDI for an Australian company, AUF, investing in a software development business in India. The aim is to investigate the country-specific political and financial risk associated with India and its effect on the capital budgeting decision-making process. To ensure optimality, the key decision-makers often use a rule of thumb while dealing with the high deliberation cost involved in the political risk; thereby supporting the concepts of bounded rationality. Reviewed Literature
FDI involves mergers and acquisitions, reinvesting profits earned from operations carried out in the different countries, the building of new facilities, and company loans. FDI is the control over the firm and can be in any form including joint venture, technological transfer, and enterprise. Globalization has made a severe impact on living standards and trade and has raised the FDI in the international market as well.
1.1. Theories
The competitive position of the Australian firms in the global market makes it an acquirer of companies in host countries where the parent firm through its dynamic capability owing to their knowledge and utilization of the available resources hel ...
Running Head FINC 420 International FinanceE.docxjoellemurphey
Running Head: FINC 420 International Finance
Exchange Rate Forecasting
Each country is encouraging foreign investment due to their realization of the benefits associated to opening for the foreign investments. Foreign investments have enhanced the expansion of multiple business opportunities and many ventures are looking for foreign investors so that they are able to increase capital budgets and the technical expertise. This may also in turn enhance the management practices of such companies. The type of foreign investment that is most common is the Foreign Direct Investment (FDI). This is the act of investing capital in an enterprise that carries out its activities in another foreign country. The investment can be done by an individual a company or a group of companies. The investor is granted a control of 10% of the shares of the enterprise he invests into and they also enjoy a share of profits too. Due to the fact that the investor is a foreign party, different policies, regulations and governing factors are applied (Sornarajah, 2010). Both parties will enjoy some benefits and may still suffer some disadvantages in relation to various factors.
FD1 and exchange rates
One of the factors that that may influence the activity of FDI is the forecasting of the behavior of foreign exchange rates. Exchange rates can be defined as the price of a foreign currency in the domestic currency. They matter in their volatility and their levels. The foreign exchange rate influences the total foreign direct investment amounts to be allocated in different countries. When a currency loses its value, this means that its value decreases relatively to the other currencies value. We can use the FDI to forecast the foreign currency rate. For example, if the wages of a country and its production costs reduces this indicates a reduction in the value of tat countries exchange rate. This movement attracts foreign investors and the depreciation of the currency exchange rate improves the rate of return to foreign investors. The main disadvantage of this investment in forecasting the foreign exchange rate occurs in case of an offsetting increase in production costs and wages in a destination market for capital investment. Anticipating the movements of the exchange rate will also diminish the relative wage importance and resulting to a higher financing cost of the investment project.
FDI and Interest Parity
Interest rate parity has a major role in the foreign exchange markets. It connects the spot exchange rates, the foreign exchange rates and the interest rates. Forecasted exchange rates may reflect higher foreign financing costs since the conditions of the interest rate parity tend to equalize the risk adjusted forecasted rate of returns. FDI implications of the foreign exchange rates are relevant to the interest- parity caveat (Sornarajah, 2010). However there are some arguments against this relevance. Some experts argue that there is an imper ...
Review of FDI Policies in India and China: Analysis and InterpretationVandanaSharma356
Foreign Direct Investment (FDI) is a wide word that encompasses any long-term investment made in the host nation by a non-resident enterprise. Typically, the investment is undertaken over a lengthy period of time with the purpose of maximizing the host nation's advantages, such as superior (and cheaper) resources, consumer market access, or direct access to the host country. All talent improves efficiency. This long-term cooperation will benefit both the investor and the host nation. If the investor makes the same investment in his own nation, he will obtain a larger return, but the host country will profit by boosting the transfer of knowledge or technology to its workforce, putting more pressure on his local business to compete. Foreign firm that can develop the sector as a whole or serve as an example for other companies thinking about investing in the host nation.
Capital Inflows and Economic Growth A Comperative Studyiosrjce
This study examines the impact of capital inflows on economic growth of developing* economies; the
case of Nigeria Ghana and India from 1986-2012. This is necessitated by the doubts being raised as whether the
huge inflows of foreign capita! in developing economies over the years have transmitted to real economic
growth. Augmented Dickey Fuller unit root test was employed to evaluate the stationarity of the data, while
Johansen Co-integration was used to estimate the long-run equilibrium relationship among the variables. The
casual relationship was tested using Granger Causality, and Ordinary Least Square method was used to
estimate the model. The finding reveals that capital inflows have significant impact on the economic growth of
the three countries. In Nigeria and Ghana, foreign direct and portfolio investment and foreign borrowings have
significant and positive impact on economic growth. Workers' remittances significantly and positively related to
the economic growth of the three countries. The enabling environment should be created in the Developing
Countries to encourage more inflow of foreign investments and workers remittances while India specifically
should channel their foreign aids to productive ends. This will help in dosing the savings-investment gap and
encourage economic growth in these countries. The study signifies that capital inflows is indispensable in
dosing the savings-investment gap required for economic growth of developing countries.
Foreign Direct Invectments in Developing countriesMunashe Kamwemba
the presentation is focusing of developing countries and the impact of Direct Foreign investments as well as factors that influence and promote investment in the area .
Running Head FINC 420 International FinanceE.docxjoellemurphey
Running Head: FINC 420 International Finance
Exchange Rate Forecasting
Each country is encouraging foreign investment due to their realization of the benefits associated to opening for the foreign investments. Foreign investments have enhanced the expansion of multiple business opportunities and many ventures are looking for foreign investors so that they are able to increase capital budgets and the technical expertise. This may also in turn enhance the management practices of such companies. The type of foreign investment that is most common is the Foreign Direct Investment (FDI). This is the act of investing capital in an enterprise that carries out its activities in another foreign country. The investment can be done by an individual a company or a group of companies. The investor is granted a control of 10% of the shares of the enterprise he invests into and they also enjoy a share of profits too. Due to the fact that the investor is a foreign party, different policies, regulations and governing factors are applied (Sornarajah, 2010). Both parties will enjoy some benefits and may still suffer some disadvantages in relation to various factors.
FD1 and exchange rates
One of the factors that that may influence the activity of FDI is the forecasting of the behavior of foreign exchange rates. Exchange rates can be defined as the price of a foreign currency in the domestic currency. They matter in their volatility and their levels. The foreign exchange rate influences the total foreign direct investment amounts to be allocated in different countries. When a currency loses its value, this means that its value decreases relatively to the other currencies value. We can use the FDI to forecast the foreign currency rate. For example, if the wages of a country and its production costs reduces this indicates a reduction in the value of tat countries exchange rate. This movement attracts foreign investors and the depreciation of the currency exchange rate improves the rate of return to foreign investors. The main disadvantage of this investment in forecasting the foreign exchange rate occurs in case of an offsetting increase in production costs and wages in a destination market for capital investment. Anticipating the movements of the exchange rate will also diminish the relative wage importance and resulting to a higher financing cost of the investment project.
FDI and Interest Parity
Interest rate parity has a major role in the foreign exchange markets. It connects the spot exchange rates, the foreign exchange rates and the interest rates. Forecasted exchange rates may reflect higher foreign financing costs since the conditions of the interest rate parity tend to equalize the risk adjusted forecasted rate of returns. FDI implications of the foreign exchange rates are relevant to the interest- parity caveat (Sornarajah, 2010). However there are some arguments against this relevance. Some experts argue that there is an imper ...
Review of FDI Policies in India and China: Analysis and InterpretationVandanaSharma356
Foreign Direct Investment (FDI) is a wide word that encompasses any long-term investment made in the host nation by a non-resident enterprise. Typically, the investment is undertaken over a lengthy period of time with the purpose of maximizing the host nation's advantages, such as superior (and cheaper) resources, consumer market access, or direct access to the host country. All talent improves efficiency. This long-term cooperation will benefit both the investor and the host nation. If the investor makes the same investment in his own nation, he will obtain a larger return, but the host country will profit by boosting the transfer of knowledge or technology to its workforce, putting more pressure on his local business to compete. Foreign firm that can develop the sector as a whole or serve as an example for other companies thinking about investing in the host nation.
Capital Inflows and Economic Growth A Comperative Studyiosrjce
This study examines the impact of capital inflows on economic growth of developing* economies; the
case of Nigeria Ghana and India from 1986-2012. This is necessitated by the doubts being raised as whether the
huge inflows of foreign capita! in developing economies over the years have transmitted to real economic
growth. Augmented Dickey Fuller unit root test was employed to evaluate the stationarity of the data, while
Johansen Co-integration was used to estimate the long-run equilibrium relationship among the variables. The
casual relationship was tested using Granger Causality, and Ordinary Least Square method was used to
estimate the model. The finding reveals that capital inflows have significant impact on the economic growth of
the three countries. In Nigeria and Ghana, foreign direct and portfolio investment and foreign borrowings have
significant and positive impact on economic growth. Workers' remittances significantly and positively related to
the economic growth of the three countries. The enabling environment should be created in the Developing
Countries to encourage more inflow of foreign investments and workers remittances while India specifically
should channel their foreign aids to productive ends. This will help in dosing the savings-investment gap and
encourage economic growth in these countries. The study signifies that capital inflows is indispensable in
dosing the savings-investment gap required for economic growth of developing countries.
Foreign Direct Invectments in Developing countriesMunashe Kamwemba
the presentation is focusing of developing countries and the impact of Direct Foreign investments as well as factors that influence and promote investment in the area .
Investment is defining as asset or item that is
purchased with the hope that it will generate income or
appreciate in the future. In an economic sense, an investment is
the purchase of goods that are not consumed today but are
used in the future to create with. In finance an investment is a
monetary asset purchased with the idea that the asset will
provide income in the future or appreciate and be sold at a
higher price. The purpose of this paper is to investigate the
impact of investment (public and private) on economic growth
in Sudan during the period 1999-2011. Date were collected
from central bureau of statistics. Using these data ordinary
least squares method was applied to the linear form of the
model. The obtained results showed that: investment has
positive impact on economic growth measured by nominal
gross domestic product, real gross domestic product and
growth rate of gross domestic product. This is similar to what
mentioned in economic theory.
Bonnie Gibson Discussion 2 Chapter 5Suggest some cautions thJeniceStuckeyoo
Bonnie Gibson
Discussion 2
Chapter 5
Suggest some cautions that an individual from a relationship oriented culture should bear in mind when dealing with someone from an information orientated culture.
Relationship-oriented societies usually have a long shared history where networks of connections are passed on from generation to generation, generating more shared context among community members (Meyer, 2014). When dealing with someone from an information oriented culture they tend to be low-context. In low-context cultures, communication is simple, clear, and explicit in order to effectively pass the message. As globalization transforms the way we work, we need to have the ability to decode cultural differences in order to work effectively with clients, suppliers, and colleagues from around the world (Meyer, 2014).
Differentiate among the following: bribery, extortion, lubrication and subornation.
Bribery is the use of funds usually illegally, to influence decisions made by public employees and government officials. There are limitless variations grouped under bribery including; extortion, lubrication, and subordination. The difference between bribery and extortion is determined by whether the payment was volunteered (bribery) or demanded (extortion). Bribery is a volunteered payment by someone seeking an unlawful advantage. Extortion is payments extracted under duress by someone in authority from a person seeking only what he or she is lawfully entitled to. Lubrication and Subornation are two additional variations of bribery. Lubrication involves a relatively small sum amount of cash, gift, or service given to a low-ranking official where such offerings are not against the law. These offerings accompany a request for a person to be more efficient and complete a job faster. Subornation involves a larger sum of money that is not accounted for to entice an official to commit an illegal act. Subornation is often a request for officials to not do their jobs, turn their heads or break the law (Cateors et al., 2020).
Chapter 6
Expropriation is considered a major risk of foreign business. Discuss ways in which this particular type of risk can be minimized somewhat as a result of company activities. Explain how these risks have been minimized by the activities of the U.S. government.
Expropriation is the seizure of an investment by a government in which some reimbursement is made to the investment owner; the seized investment often becomes nationalized. Expropriation can lead to nationalized businesses that are inefficient, weak technologically, and noncompetitive in world markets. To minimize this risk today many countries often require prospective investors to agree to share ownership, use local content, have labor-management agreements, and share participation in export sales as a condition of entry. The U.S. government is motivated to encourage firms to seek business opportunities in other countries worldwide. It seeks to create a favorable ...
Study on the Impact of Industry Prosperity on the Level of Corporate Risk Takingijtsrd
Based on the principal agent theory, we construct a research framework of external environment—investment efficiency—corporate risk taking level. Utilizing data on industry prosperity from 2019 to 2023 and combining panel data on corporate risk taking levels in the eastern, central, and western regions of China, we employ a multi time point DID model for OLS regression to analyze the impact of industry prosperity on the level of corporate risk taking under regional differences. The results indicate 1 Companies in industries with higher prosperity tend to have higher investment efficiency and more stable revenue, leading to lower levels of corporate risk taking 2 Higher market freedom weakens the influence of industry prosperity on the local corporate risk taking level 3 The degree of market liberalization in the eastern, central, and western regions of China is gradually decreasing, making the impact of industry prosperity on the risk taking level of companies highest in the western region, followed by the central region, and the eastern region experiencing the smallest impact. Zhang Beiheng "Study on the Impact of Industry Prosperity on the Level of Corporate Risk Taking" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-7 | Issue-6 , December 2023, URL: https://www.ijtsrd.com/papers/ijtsrd61201.pdf Paper Url: https://www.ijtsrd.com/management/accounting-and-finance/61201/study-on-the-impact-of-industry-prosperity-on-the-level-of-corporate-risk-taking/zhang-beiheng
The Relationship between Foreign Trade and Financial Performance of the Liste...IOSRJBM
The main objective of this study was to determine the relationship between foreign trade and financial performance of the listed manufacturing companies in Nigeria. The study focused on the 32 listed companies randomly drawn from the 74 listed manufacturing companies in Nigeria. The secondary data extracted from the financial statement of these companies were subjected to both descriptive and inferential statistics. The result shows a significant positive relationship between the two variables. It was therefore recommended that the management and the board of directors of the listed manufacturing companies should intensify efforts on how the locally produced products will be able to penetrate into the foreign countries as it was discovered that majority of the goods produced by the manufacturing companies in Nigeria are consumed locally
Business and Government Relations Please respond to the following.docxCruzIbarra161
"Business and Government Relations" Please respond to the following:
Discuss the main reasons why a business should or should not be involved in political discussions or take a political stand. Use terms found in Chapter 9 to demonstrate your understanding of the material. You can submit your initial discussion post and responses in either written or video format (2-3 minutes or less).
.
Business Continuity Planning Explain how components of the busine.docxCruzIbarra161
Business Continuity Planning: Explain how components of the business infrastructure are included in a business continuity plan. Discuss the processes of planning, analysis, design, implementation, testing and maintenance in developing this plan. This assignment must be at least 2 full pages. Apply the 4-C's of writing:
Correct, complete, clear, and concise.
.
More Related Content
Similar to Country Risk incorporating into capital budgeting1Country Risk
Investment is defining as asset or item that is
purchased with the hope that it will generate income or
appreciate in the future. In an economic sense, an investment is
the purchase of goods that are not consumed today but are
used in the future to create with. In finance an investment is a
monetary asset purchased with the idea that the asset will
provide income in the future or appreciate and be sold at a
higher price. The purpose of this paper is to investigate the
impact of investment (public and private) on economic growth
in Sudan during the period 1999-2011. Date were collected
from central bureau of statistics. Using these data ordinary
least squares method was applied to the linear form of the
model. The obtained results showed that: investment has
positive impact on economic growth measured by nominal
gross domestic product, real gross domestic product and
growth rate of gross domestic product. This is similar to what
mentioned in economic theory.
Bonnie Gibson Discussion 2 Chapter 5Suggest some cautions thJeniceStuckeyoo
Bonnie Gibson
Discussion 2
Chapter 5
Suggest some cautions that an individual from a relationship oriented culture should bear in mind when dealing with someone from an information orientated culture.
Relationship-oriented societies usually have a long shared history where networks of connections are passed on from generation to generation, generating more shared context among community members (Meyer, 2014). When dealing with someone from an information oriented culture they tend to be low-context. In low-context cultures, communication is simple, clear, and explicit in order to effectively pass the message. As globalization transforms the way we work, we need to have the ability to decode cultural differences in order to work effectively with clients, suppliers, and colleagues from around the world (Meyer, 2014).
Differentiate among the following: bribery, extortion, lubrication and subornation.
Bribery is the use of funds usually illegally, to influence decisions made by public employees and government officials. There are limitless variations grouped under bribery including; extortion, lubrication, and subordination. The difference between bribery and extortion is determined by whether the payment was volunteered (bribery) or demanded (extortion). Bribery is a volunteered payment by someone seeking an unlawful advantage. Extortion is payments extracted under duress by someone in authority from a person seeking only what he or she is lawfully entitled to. Lubrication and Subornation are two additional variations of bribery. Lubrication involves a relatively small sum amount of cash, gift, or service given to a low-ranking official where such offerings are not against the law. These offerings accompany a request for a person to be more efficient and complete a job faster. Subornation involves a larger sum of money that is not accounted for to entice an official to commit an illegal act. Subornation is often a request for officials to not do their jobs, turn their heads or break the law (Cateors et al., 2020).
Chapter 6
Expropriation is considered a major risk of foreign business. Discuss ways in which this particular type of risk can be minimized somewhat as a result of company activities. Explain how these risks have been minimized by the activities of the U.S. government.
Expropriation is the seizure of an investment by a government in which some reimbursement is made to the investment owner; the seized investment often becomes nationalized. Expropriation can lead to nationalized businesses that are inefficient, weak technologically, and noncompetitive in world markets. To minimize this risk today many countries often require prospective investors to agree to share ownership, use local content, have labor-management agreements, and share participation in export sales as a condition of entry. The U.S. government is motivated to encourage firms to seek business opportunities in other countries worldwide. It seeks to create a favorable ...
Study on the Impact of Industry Prosperity on the Level of Corporate Risk Takingijtsrd
Based on the principal agent theory, we construct a research framework of external environment—investment efficiency—corporate risk taking level. Utilizing data on industry prosperity from 2019 to 2023 and combining panel data on corporate risk taking levels in the eastern, central, and western regions of China, we employ a multi time point DID model for OLS regression to analyze the impact of industry prosperity on the level of corporate risk taking under regional differences. The results indicate 1 Companies in industries with higher prosperity tend to have higher investment efficiency and more stable revenue, leading to lower levels of corporate risk taking 2 Higher market freedom weakens the influence of industry prosperity on the local corporate risk taking level 3 The degree of market liberalization in the eastern, central, and western regions of China is gradually decreasing, making the impact of industry prosperity on the risk taking level of companies highest in the western region, followed by the central region, and the eastern region experiencing the smallest impact. Zhang Beiheng "Study on the Impact of Industry Prosperity on the Level of Corporate Risk Taking" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-7 | Issue-6 , December 2023, URL: https://www.ijtsrd.com/papers/ijtsrd61201.pdf Paper Url: https://www.ijtsrd.com/management/accounting-and-finance/61201/study-on-the-impact-of-industry-prosperity-on-the-level-of-corporate-risk-taking/zhang-beiheng
The Relationship between Foreign Trade and Financial Performance of the Liste...IOSRJBM
The main objective of this study was to determine the relationship between foreign trade and financial performance of the listed manufacturing companies in Nigeria. The study focused on the 32 listed companies randomly drawn from the 74 listed manufacturing companies in Nigeria. The secondary data extracted from the financial statement of these companies were subjected to both descriptive and inferential statistics. The result shows a significant positive relationship between the two variables. It was therefore recommended that the management and the board of directors of the listed manufacturing companies should intensify efforts on how the locally produced products will be able to penetrate into the foreign countries as it was discovered that majority of the goods produced by the manufacturing companies in Nigeria are consumed locally
Business and Government Relations Please respond to the following.docxCruzIbarra161
"Business and Government Relations" Please respond to the following:
Discuss the main reasons why a business should or should not be involved in political discussions or take a political stand. Use terms found in Chapter 9 to demonstrate your understanding of the material. You can submit your initial discussion post and responses in either written or video format (2-3 minutes or less).
.
Business Continuity Planning Explain how components of the busine.docxCruzIbarra161
Business Continuity Planning: Explain how components of the business infrastructure are included in a business continuity plan. Discuss the processes of planning, analysis, design, implementation, testing and maintenance in developing this plan. This assignment must be at least 2 full pages. Apply the 4-C's of writing:
Correct, complete, clear, and concise.
.
business and its environment Discuss the genesis, contributing fac.docxCruzIbarra161
business and its environment
Discuss the genesis, contributing factors, modus operandi, effectiveness in generating social pressure, the strategy followed by target companies along with allied aspects with two examples from Canadian mining, manufacturing, telecommunication or utility companies.
minimum of 2000 words and 10 good quality references.
The paper should be properly cited as per
APA format.
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business and its environment Discuss the genesis, contributing facto.docxCruzIbarra161
business and its environment Discuss the genesis, contributing factors, modus operandi, effectiveness in generating social pressure, the strategy followed by target companies along with allied aspects with two examples from Canadian mining, manufacturing, telecommunication or utility companies. minimum of 2000 words and 10 good quality references. The paper should be properly cited as per APA format.
.
Business BUS 210 research outline1.Cover page 2.Table .docxCruzIbarra161
Business BUS 210 research outline
1.
Cover page
2.
Table of content
3.
Executive summary
4.
Introduction
5.
Business Hypothesis / or Statement/ or the Main Question for the whole research
6.
Literature review
7.
Designing the questionnaires
8.
Pretest/ pilot test
9.
Adjust the questioners
– if required
10.
Collect the data from the official sample
11.
Data Entry
12.
Analysis
13.
Tabulations: Frequencies
“and Cross-tabulation if required”
14.
Report
o
Include the purpose for the business research
o
Time
o
Sample size
o
Location
o
Target
o
Way to collect the data (by email, personal, interview, phone…)
o
Challenges you faced
o
Findings /results
15.
Conclusion
16.
Recommendation
17.
References
18.
Appendixes
o
Questionnaire
o
All tabulations
.
BUS 439 International Human Resource ManagementInstructor Steven .docxCruzIbarra161
BUS 439 International Human Resource Management
Instructor: Steven Foster
Why did Nestle’s decentralized structure, which had brought the company success in the past, no longer fit the new realities of increasing global competition? What were the objectives of the GLOBE initiative? How was it more than just an SAP change?
.
BUS 439 International Human Resource ManagementEmployee Value Pr.docxCruzIbarra161
BUS 439 International Human Resource Management
Employee Value Proposition
Define and discuss EVP – what factors may make it difficult to determine EVP on a global basis? What considerations should be made to clearly understand and make use of this information? Why is EVP important for organizations to understand? What can organizations do to build a differentiated EVP?
.
Bullzeye is a discount retailer offering a wide range of products,.docxCruzIbarra161
Bullzeye is a discount retailer offering a wide range of products, including: home goods, clothing, toys, and food. The company is a regional retailer with 10 brick-and-mortar stores as well as a popular online store. Due to the recent credit card data breaches of various prominent national retail companies (e.g., Target, Home Depot, Staples), the Bullzeye Board of Directors has taken particular interest in information security, especially as it pertains to the protection of credit cardholder data within the Bullzeye environment. The Board has asked executive management to evaluate and strengthen the enterprise’s information security infrastructure, where needed.
In order to respond to the Board regarding their preparedness for a cyber-security attack, the Chief Financial Officer (CFO) has engaged your IT consulting firm to identify the inherent risks and recommend control remediation strategies to prevent or to detect and appropriately respond to data breaches. Your firm has been requested to liaison with the Internal Audit Department during the engagement. Your first step is to gain an understanding of Bullzeye’s IT environment. The Chief Audit Executive (CAE) schedules a meeting with key Bullzeye leadership personnel, including the CFO, Chief Information Officer (CIO), and Chief Information Security Officer (CISO).
The following key information was obtained.
Background
IT Security Framework/Policy -
Bullzeye has an information security policy, which was developed by the CISO. The policy was developed in response to an internal audit conducted by an external firm hired by the CAE. The policy is not based on one specific IT control framework but considers elements contained within several frameworks. An information security committee has been recently formed to discuss new security risks and to develop mitigation strategies.
The meeting will be held monthly and include the CISO and other key IT Directors reporting to the CIO.
In addition, a training program was implemented last year in order to provide education on various information security topics (e.g., social engineering, malware, etc.). The program requires that all staff within the IT department complete an annual information security training webinar and corresponding quiz. The training program is complemented by a monthly e-mail sent to IT staff, which highlights relevant information security topics.
General IT Environment -
Most employees in the corporate office are assigned a standard desktop computer, although certain management personnel in the corporate and retail locations are issued a laptop if they can demonstrate their need to work remotely. The laptops are given a standard Microsoft Windows operating system image, which includes anti-malware/anti-virus software and patch update software among others. In addition, new laptops are now encrypted; however, desktops and existing laptops are not currently encrypted due to budget concerns. The user provisioning.
Building on the work that you prepared for Milestones One through Th.docxCruzIbarra161
Building on the work that you prepared for Milestones One through Three, submit a document that builds upon the previously completed milestone summaries to provide an overall summary of the distribution company’s IT system as a whole. This should illustrate how each individual system component (network, database, web technology, computers, programming, and security systems) interrelates with the others and summarize the importance of IT technologies for the overall system.
.
Budget Legislation Once the budget has been prepared by the vari.docxCruzIbarra161
Budget Legislation
Once the budget has been prepared by the various agencies, it is often moved forward to the legislative body for authorization. The legislation process can result in unintended outcomes and restrictions. Search the internet and news reporting services for a story on an unintended outcome of interest to you and answer the following questions:
How did politics shape the outcome in unexpected ways?
Did “pork” spending or “apportionments and allotments” budget amendments affect the legislation?
Did a mid-year crisis or change in revenue expectations substantially impact the budget legislative action?
Respond to at least two of your classmates’ postings.
Performance Budgeting
Performance budgeting has been attempted at the local level in recent years. Address the issues of performance budgeting while answering the following questions: What attributes of performance budgeting make it particularly suitable to local government budgeting? Will the same attributes be as useful at the federal level? Respond to at least two of your classmates’ postings.
.
Browsing the podcasts on iTunes or YouTube, listen to a few of Gramm.docxCruzIbarra161
Browsing the podcasts on iTunes or YouTube, listen to a few of Grammar Girl's Quick and Dirty Tips series (grammar tips by Mignon Fogarty) or Money Girl's series (financial advice by Laura Adams).
Your Task: Pick a Money Girl or Grammar Girl podcast that interests you. Listen to it, or obtain a transcript on the website and study it for its structure. Is it direct or indirect? Informative or persuasive? How is it presented? What style does the speaker adopt? Was it effective? What changes would you suggest? Write an e-mail that discusses the podcast you analyzed.
.
Brown Primary Care Dental clinics Oral Health Initiative p.docxCruzIbarra161
Brown Primary Care Dental clinics Oral Health Initiative project
The project will consist of three elements:
•
Part 1: Economic Analysis of the Initiative of Choice [
Brown Primary Care Dental clinics Oral Health Initiative
5 pages) .
The economic analysis should include:
Principles of economics for evaluating and assessing the need for the public health initiative
A brief description of whether the initiative is a micro or macroeconomic program
A determination of whether the result of the initiative is a public or private good
A description of the initiative’s financing source
An explanation of how the initiative may affect supply and demand of public health services
•
Part 2: Financial Accounting Analysis (5 pages)
A 5-year proposed budget including major line items (see blank form for proposed budget on NIH grants pagelocated in the course syllabus or here:
Online Article:
U.S. Department of Health and Human Services (2009, June).
Public health service: PHS 398
. Detailed Budget for Initial Budget Period Form Page 4
http://grants.nih.gov/grants/funding/phs398/phs398.html
Grant Application PHS 398. U.S. Department of Health And Human Services Public Health Service.
-An analysis of budget line items, costs, sources of revenue, and deficits
-An analysis of the fiscal soundness and long-term viability of the public -health initiative
•
Part 3: Alternative Funding Sources (5pages)
Part 3: Alternative Funding Sources[ 5 pages
For this part of your Scholar-Practitioner Project you will evaluate funding sources for the public health initiative you selected in Week 2. Then, you will submit a mock grant proposal for an appropriate grant to supplement or allow expansion of your selected public health initiative.
The proposal should include:
•
The public health initiative’s purpose, background, goals, and objectives
•
A description of the funding sources you selected and explanation of why you selected it over others
•
Eligibility and selection criteria for the funding source
•
An explanation of the funds needed and how the funds may be used
•
The adjusted total 5-year budget you completed in week 9 (include all instructor recommendations)
(8 sources/references)
.
BUDDHISMWEEK 3Cosmogony - Origin of the UniverseNature of .docxCruzIbarra161
BUDDHISM
WEEK 3
Cosmogony - Origin of the Universe
Nature of God/Creator
View of Human Nature
View of Good & Evil
View of Salvation
View of After Life
Practices and Rituals
Celebrations & Festivals
Week 3 - Sources
.
Build a binary search tree that holds first names.Create a menu .docxCruzIbarra161
Build a binary search tree that holds first names.
Create a menu with the following options.
Add a name to the list (will add a new node)
Delete a name from the list (will delete a node)
NEXT PAGE
à
Search for a name (will return if the name is in the tree or not)
Output the number of leaves in your tree
Output the tree (Complete an inorder traversal.)
.
Briefly describe the development of the string quartet. How would yo.docxCruzIbarra161
Briefly describe the development of the string quartet. How would you relate this chamber ensemble to modern performing groups such as the jazz quartet? Or to a rock ensemble? What are some of the similarities and differences? Refer to the listening examples in the Special Focus to support your conclusions.
Listening examples:
String Quartet in E-Flat, No. 2
("Joke") by Haydn
String Quartet in C Minor
by Beethoven
String Quartet No. 2, Op. 17
by Bartók
.
Briefly describe a time when you were misled by everyday observation.docxCruzIbarra161
Briefly describe a time when you were misled by everyday observations (that is when you reached a conclusion on the basis of an everyday observation that you later decided was an incorrect conclusion). What type of error in casual inquiry (sources of secondhand knowledge) were you guilty of? Examples include over-generalization, stereotyping, illogical reasoning, etc
.
Broadening Your Perspective 8-1The financial statements of Toots.docxCruzIbarra161
Broadening Your Perspective 8-1
The financial statements of Tootsie Roll are presented below.
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
Earnings, Comprehensive Earnings and Retained Earnings (in thousands except per share data)
For the year ended December 31,
2011
2010
2009
Net product sales
$528,369
$517,149
$495,592
Rental and royalty revenue
4,136
4,299
3,739
Total revenue
532,505
521,448
499,331
Product cost of goods sold
365,225
349,334
319,775
Rental and royalty cost
1,038
1,088
852
Total costs
366,263
350,422
320,627
Product gross margin
163,144
167,815
175,817
Rental and royalty gross margin
3,098
3,211
2,887
Total gross margin
166,242
171,026
178,704
Selling, marketing and administrative expenses
108,276
106,316
103,755
Impairment charges
—
—
14,000
Earnings from operations
57,966
64,710
60,949
Other income (expense), net
2,946
8,358
2,100
Earnings before income taxes
60,912
73,068
63,049
Provision for income taxes
16,974
20,005
9,892
Net earnings
$43,938
$53,063
$53,157
Net earnings
$43,938
$53,063
$53,157
Other comprehensive earnings (loss)
(8,740
)
1,183
2,845
Comprehensive earnings
$35,198
$54,246
$56,002
Retained earnings at beginning of year.
$135,866
$147,687
$144,949
Net earnings
43,938
53,063
53,157
Cash dividends
(18,360
)
(18,078
)
(17,790
)
Stock dividends
(47,175
)
(46,806
)
(32,629
)
Retained earnings at end of year
$114,269
$135,866
$147,687
Earnings per share
$0.76
$0.90
$0.89
Average Common and Class B Common shares outstanding
57,892
58,685
59,425
(The accompanying notes are an integral part of these statements.)
CONSOLIDATED STATEMENTS OF
Financial Position
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES (in thousands except per share data)
Assets
December 31,
2011
2010
CURRENT ASSETS:
Cash and cash equivalents
$78,612
$115,976
Investments
10,895
7,996
Accounts receivable trade, less allowances of $1,731 and $1,531
41,895
37,394
Other receivables
3,391
9,961
Inventories:
Finished goods and work-in-process
42,676
35,416
Raw materials and supplies
29,084
21,236
Prepaid expenses
5,070
6,499
Deferred income taxes
578
689
Total current assets
212,201
235,167
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land
21,939
21,696
Buildings
107,567
102,934
Machinery and equipment
322,993
307,178
Construction in progress
2,598
9,243
455,097
440,974
Less—Accumulated depreciation
242,935
225,482
Net property, plant and equipment
212,162
215,492
OTHER ASSETS:
Goodwill
73,237
73,237
Trademarks
175,024
175,024
Investments
96,161
64,461
Split dollar officer life insurance
74,209
.
Briefly discuss the differences in the old Minimum Foundation Prog.docxCruzIbarra161
Briefly discuss the differences in the old Minimum Foundation Program ( 1947 ) and the FEFP ( 1973 ).
What part of the basic FEFP formula ( State Aid = WFTE x BSA - (.96 AV } provides A. equity for students and B. equalization of funding for districts?
Review how student transportation dollars are calculated. What are the two major components?
What is the function of Workforce Development funds?
What are Categorical Program funds? How do they differ from general FEFP funding?
What are the four constructs on which the FEFP is based? ( Page 1--2
nd
paragraph )
Briefly define the following:
Full time equivalent
Program cost factor
Weighted FTE
Base student allocation
District cost differential
Sparsity supplement
Supplemental academic instruction
0.748 Mills Discretionary Compresion (audio is incorrect-changed from Local Discretionary Equalization).
ESE guaranteed allocation
Required local effort
Please answer all in as a mini- brief and follow directions as I tried to be as spicific as possible with the questions.
.
Briefly compare and contrast EHRs, EMRs, and PHRs. Include the typic.docxCruzIbarra161
Briefly compare and contrast EHRs, EMRs, and PHRs. Include the typical content and functionality of each.
Focusing on one of these types of records, describe the key benefits for one of the stakeholders (e.g., patients, providers, or health care management) of being able to record and/or access patient data through this system.
Should all patient health information be recorded electronically? If so, explain why. If not, explain what the exceptions should be and why.
.
Brief Exercise 9-11Suppose Nike, Inc. reported the followin.docxCruzIbarra161
*Brief Exercise 9-11
Suppose
Nike, Inc.
reported the following plant assets and intangible assets for the year ended May 31, 2014 (in millions): other plant assets $954.9; land $226.7; patents and trademarks (at cost) $530.7; machinery and equipment $2,137.2; buildings $967; goodwill (at cost) $207.5; accumulated amortization $59.3; and accumulated depreciation $2,290.
Prepare a partial balance sheet for Nike for these items.
(List Property, Plant and Equipment in order of Land, Buildings and Equipment.)
NIKE, INC.
Partial Balance Sheet
As of May 31, 2014
(in millions)
[removed]
[removed]
$
[removed]
[removed]
$
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
:
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
$
[removed]
[removed]
:
[removed]
[removed]
[removed]
[removed]
*Exercise 9-7
Wang Co. has delivery equipment that cost $50,840 and has been depreciated $24,960.
Record entries for the disposal under the following assumptions.
(Credit account titles are automatically indented when amount is entered. Do not indent manually.)
(a)
It was scrapped as having no value.
(b)
It was sold for $37,200.
(c)
It was sold for $19,360.
No.
Account Titles and Explanation
Debit
Credit
(a)
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
(b)
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
(c)
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
*Exercise 9-8
Here are selected 2014 transactions of Cleland Corporation.
Jan. 1
Retired a piece of machinery that was purchased on January 1, 2004. The machine cost $62,160 and had a useful life of 10 years with no salvage value.
June 30
Sold a computer that was purchased on January 1, 2012. The computer cost $37,000 and had a useful life of 4 years with no salvage value. The computer was sold for $5,630 cash.
Dec. 31
Sold a delivery truck for $9,310 cash. The truck cost $23,600 when it was purchased on January 1, 2011, and was depreciated based on a 5-year useful life with a $3,290 salvage value.
Journalize all entries required on the above dates, including entries to update depreciation on assets disposed of, where applicable. Cleland Corporation uses straight-line depreciation.
(Record entries in the order displayed in the problem statement. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Debit
Credit
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
(To record depreciation expense for the first 6 months of 2014)
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
[remo.
Students, digital devices and success - Andreas Schleicher - 27 May 2024..pptxEduSkills OECD
Andreas Schleicher presents at the OECD webinar ‘Digital devices in schools: detrimental distraction or secret to success?’ on 27 May 2024. The presentation was based on findings from PISA 2022 results and the webinar helped launch the PISA in Focus ‘Managing screen time: How to protect and equip students against distraction’ https://www.oecd-ilibrary.org/education/managing-screen-time_7c225af4-en and the OECD Education Policy Perspective ‘Students, digital devices and success’ can be found here - https://oe.cd/il/5yV
We all have good and bad thoughts from time to time and situation to situation. We are bombarded daily with spiraling thoughts(both negative and positive) creating all-consuming feel , making us difficult to manage with associated suffering. Good thoughts are like our Mob Signal (Positive thought) amidst noise(negative thought) in the atmosphere. Negative thoughts like noise outweigh positive thoughts. These thoughts often create unwanted confusion, trouble, stress and frustration in our mind as well as chaos in our physical world. Negative thoughts are also known as “distorted thinking”.
The Roman Empire A Historical Colossus.pdfkaushalkr1407
The Roman Empire, a vast and enduring power, stands as one of history's most remarkable civilizations, leaving an indelible imprint on the world. It emerged from the Roman Republic, transitioning into an imperial powerhouse under the leadership of Augustus Caesar in 27 BCE. This transformation marked the beginning of an era defined by unprecedented territorial expansion, architectural marvels, and profound cultural influence.
The empire's roots lie in the city of Rome, founded, according to legend, by Romulus in 753 BCE. Over centuries, Rome evolved from a small settlement to a formidable republic, characterized by a complex political system with elected officials and checks on power. However, internal strife, class conflicts, and military ambitions paved the way for the end of the Republic. Julius Caesar’s dictatorship and subsequent assassination in 44 BCE created a power vacuum, leading to a civil war. Octavian, later Augustus, emerged victorious, heralding the Roman Empire’s birth.
Under Augustus, the empire experienced the Pax Romana, a 200-year period of relative peace and stability. Augustus reformed the military, established efficient administrative systems, and initiated grand construction projects. The empire's borders expanded, encompassing territories from Britain to Egypt and from Spain to the Euphrates. Roman legions, renowned for their discipline and engineering prowess, secured and maintained these vast territories, building roads, fortifications, and cities that facilitated control and integration.
The Roman Empire’s society was hierarchical, with a rigid class system. At the top were the patricians, wealthy elites who held significant political power. Below them were the plebeians, free citizens with limited political influence, and the vast numbers of slaves who formed the backbone of the economy. The family unit was central, governed by the paterfamilias, the male head who held absolute authority.
Culturally, the Romans were eclectic, absorbing and adapting elements from the civilizations they encountered, particularly the Greeks. Roman art, literature, and philosophy reflected this synthesis, creating a rich cultural tapestry. Latin, the Roman language, became the lingua franca of the Western world, influencing numerous modern languages.
Roman architecture and engineering achievements were monumental. They perfected the arch, vault, and dome, constructing enduring structures like the Colosseum, Pantheon, and aqueducts. These engineering marvels not only showcased Roman ingenuity but also served practical purposes, from public entertainment to water supply.
How to Split Bills in the Odoo 17 POS ModuleCeline George
Bills have a main role in point of sale procedure. It will help to track sales, handling payments and giving receipts to customers. Bill splitting also has an important role in POS. For example, If some friends come together for dinner and if they want to divide the bill then it is possible by POS bill splitting. This slide will show how to split bills in odoo 17 POS.
How to Create Map Views in the Odoo 17 ERPCeline George
The map views are useful for providing a geographical representation of data. They allow users to visualize and analyze the data in a more intuitive manner.
Palestine last event orientationfvgnh .pptxRaedMohamed3
An EFL lesson about the current events in Palestine. It is intended to be for intermediate students who wish to increase their listening skills through a short lesson in power point.
The Art Pastor's Guide to Sabbath | Steve ThomasonSteve Thomason
What is the purpose of the Sabbath Law in the Torah. It is interesting to compare how the context of the law shifts from Exodus to Deuteronomy. Who gets to rest, and why?
Welcome to TechSoup New Member Orientation and Q&A (May 2024).pdfTechSoup
In this webinar you will learn how your organization can access TechSoup's wide variety of product discount and donation programs. From hardware to software, we'll give you a tour of the tools available to help your nonprofit with productivity, collaboration, financial management, donor tracking, security, and more.
Unit 8 - Information and Communication Technology (Paper I).pdfThiyagu K
This slides describes the basic concepts of ICT, basics of Email, Emerging Technology and Digital Initiatives in Education. This presentations aligns with the UGC Paper I syllabus.
This is a presentation by Dada Robert in a Your Skill Boost masterclass organised by the Excellence Foundation for South Sudan (EFSS) on Saturday, the 25th and Sunday, the 26th of May 2024.
He discussed the concept of quality improvement, emphasizing its applicability to various aspects of life, including personal, project, and program improvements. He defined quality as doing the right thing at the right time in the right way to achieve the best possible results and discussed the concept of the "gap" between what we know and what we do, and how this gap represents the areas we need to improve. He explained the scientific approach to quality improvement, which involves systematic performance analysis, testing and learning, and implementing change ideas. He also highlighted the importance of client focus and a team approach to quality improvement.
Home assignment II on Spectroscopy 2024 Answers.pdf
Country Risk incorporating into capital budgeting1Country Risk
1. Country Risk incorporating into capital budgeting 1
Country Risk incorporating into capital budgeting 8
Foreign Direct Investment is an investment that a multinational
corporation makes in a host country where they act as a parent
company and have control and earn a private return. The
collaboration between companies, the cross-border partnership
can facilitate long-term business solutions. Foreign firms
through geographic diversification can safeguard themselves
from supply chain disruption and can enhance the economic
prospects of both host country and parent country. One of the
perplexing issues faced in international business lies within the
political and financial risk in project investment. Political risk
can be defined as the risk which affects the cash flow of any
company dealing in international business and investment which
is affected by a change in government action. A subject matter
of paradox gets its exposure when several authors and scholars
vouch for the way capital budgeting is explained and practiced.
The general observation in a corporate finance world is the
increase in the value of shareholders with NPV being positive.
The project cash flow can be forecasted followed by discounting
method at a discounting rate to reflect the price that the capital
market is charging for the risk in cash flow; hence the
derivation for NPV (Guo & Zheng,2020). The investors only
consider the systematic risk of the project while ignoring the
imperfection that is captured in the capital market in the case of
capital budgeting. It is also believed that that quantification of
the political risk is a difficult task even for investors.
In this paper, we will explore the country's risk in a broader
aspect and incorporate it with the concepts of capital budgeting.
It will also contain empirical evidence of FDI for an Australian
company, AUF, investing in a software development business in
India. The aim is to investigate the country-specific political
and financial risk associated with India and its effect on the
capital budgeting decision-making process. To ensure
2. optimality, the key decision-makers often use a rule of thumb
while dealing with the high deliberation cost involved in the
political risk; thereby supporting the concepts of bounded
rationality. Reviewed Literature
FDI involves mergers and acquisitions, reinvesting profits
earned from operations carried out in the different countries, the
building of new facilities, and company loans. FDI is the
control over the firm and can be in any form including j oint
venture, technological transfer, and enterprise. Globalization
has made a severe impact on living standards and trade and has
raised the FDI in the international market as well.
1.1. Theories
The competitive position of the Australian firms in the gl obal
market makes it an acquirer of companies in host countries
where the parent firm through its dynamic capability owing to
their knowledge and utilization of the available resources helps
it gain a competitive advantage in the international business.
Therefore, FDI can promote the conjunction of the competitive
position between a parent and a host country (Muzi, Kizil&
Ceylan, 2021). The foreign firms can reduce their set up costs
by integrating technological advantage and know-how which
will reduce the price in the host country. the consumers will
enjoy a higher quality of goods at lower prices. The output of an
MNC can be the input of a host country, this implies that FDI
has the potential to create demand in such countries leading to
an upward shift in the upstream and downstream domestic
investment in the host country.
The product life cycle is a firm concept that describes any
change in a country’s trade position in the long run (Paul &
Singh, 2017). It asserts that there is a shift in the competitive
advantage from one nation to the lower cost nations as a product
matures through its life cycle. The comparative advantage lies
with the parent country due to the technological know-how over
the other. in the third stage of the product life cycle, the less
developed nations become the manufacturing hub for the MNC’s
pertaining to the advantages where they indulge in exporting the
3. manufactured products to the advanced nations.
Market imperfect trade theory arises from the international
market where several companies are the owners of market
shares (Bajrami, 2019). Firms have shown imitative behavior
were to sustain competitive advantage firms are often observed
to have followed the internationalization of competitors.
1.2. Country Risk
The country risk is the degree of uncertainty involved with the
cash flows of the MNCs due to the adverse impact on the
country’s environment (Deligonul, 2020). A country runs a risk
analysis while starting a new project in some country or for
decision making to continue the existing business.
Political risk factors
Literature on the concepts of corporate valuation and the
effects of political factors is a growing concept and is available
in decent ransom.
(1) Blocked Funds: Blocking of funds arises when the
government of the host country restricts the remittance of funds
to the foreign country (Clark, 2018). However, it does not affect
the ownership rights of the parent company. the MNC can
alternatively invest the funds in any security locally, however,
the returns will be comparatively lower.
(2) Changing Tax Laws: A change in the tax law can have a
positive or negative impact on the investment (Guo & Zheng,
2020). A country with a rigid or poorly designed tax system will
discourage the investments which will bring more uncertainty
and added project costs
(3) Public attitude towards the firm: It can be in form of
purchasing tendency of the consumers which has shifted to local
goods. The exporters have very little to do with this risk as
every country motivates its consumers to purchase local goods
(Giambona, Graham & Harvey, 2017). Therefore, the parent
company in Australia must assess the loyalty o the consumers in
the host country and enter into a joint venture with a local
company instead of exporting goods.
(4) Wars: Any political changes like wars and public revolt
4. against firms can lead to higher taxes, expropriation, reduced
FDI incentives, tariffs, and difficulty in currency conversion. It
can lead to termination of operation, loss of assets, the decline
in income after tax, higher cost for imports, higher operational
costs. The MNC is indirectly affected due to additional costs for
its employee safety.
(5) Changing attitude of the host government toward the
Multinational Corporation:
The host government has the power to control the cash flow of
the parent company. it can be in the form of additional taxes,
even withhold it, restrict fund transfer, and a new pollution
control standard.
Financial Risk Factors
Besides political risk, financial risks must also be considered by
the MNC before deciding to invest further or make a new
investment decision in a host country (Rafat & Farahani, 2019).
An MNC which exports goods to a foreign country is concerned
with the demand for its product which is influenced by the
economy of the host country.
1. Inflation: The consumers’ purchasing power is affected by
the rates of inflation which influences the demand for MNC
goods. There is an indirect influence over the country’s interest
rates and currency valuation. High inflation rates are directly
related to a fall in economic growth.
2. Interest Rates: A higher rate of interest reduces the growth of
the economy and lowers the demand for MNC’s products and
vice versa.
3. GDP Growth: The real GDP growth, has a positive
relationship with the FDI and increases the FDI inflow for a
host country.
4. Exchange Rates: The rate of exchange also impacts the
country’s export which affects the production of the country and
the revenue from it. When the currency is strong, the export
demand reduces, and the import increases which causes a
decline in the overall production and national income of the
5. host country.
5. Labor Costs: If the labor cost is low, the foreign firms can
earn higher output by providing extra incentives to employees.
This will help in creating higher revenues.
Analysis
Country risk of India
The OECD risk grade of the country is at 3 indicating a
situation that the country can be unable to meet its external debt
obligation and can default (exportfionance.gov.au).
Figure 1: Country Risk rating of India (exportfionance.gov.au).
According to the reports from the World Bank’s ease of doing
business, India has improved its position and is ranked 63rd.
There are few benefits like handling cross-border trading,
construction permits, protecting the interests of minors, and
easy electricity and credit availability. However, the challenge
is associated with starting a new business, registering property,
and the tax structures of the country.
Figure 2: Ease of Doing Business(exportfionance.gov.au).
Incorporating country risk into capital budgeting
Country risk can be incorporated into capital budgeting using
the adjustment of estimated cash flows or discount rates
(Espinoza et al.,2020).
Adjustment of the Discount Rate
The discount rate and the country's risk can be adjusted with
each other. Lower the credit rating, more is the perceived risk,
and a greater discount rate will have to be applied to the cash
6. flow of the project. there is no precise formula for calculating
the discount rate and can lead to the cancellation of a feasible
project.
Adjustment of the Estimated Cash Flow
The feasible method to incorporate country risk is using the
cash flow estimation. Assuming that there is a 15% chance that
the Indian government will block the fund's transfer to the
parent country, the parent company in Australia must assess the
NPV of the project considering the condition. The Australian
government must assess the NPV of the foreign project if there
is a chance for the takeover of the software business. Every
possible impact on the cash flow and the NPV must be
calculated to derive the probability distribution of the NPV. The
probability of the project will assess NPV and its size. In this
way, the country's risk can be incorporated into the cash flow.
Australia has a 40% chance of withholding tax imposed by the
Indian government which will be 30% instead of 20%. There is
also an additional 42% chance that the host country will provide
Australia a salvage value payment of $6million instead of
$12million which is country risk.
Year 0
Year 1
Year 2
Year 3
Year 4
$ remitted by a subsidiary
$8,000,000
8,000,000
$6,600,000
$7,800,000
The withholding tax imposed on remitted funds(20%)
7. $1,600,000
$1,600,000
$1,320,000
$1,170,000
$ remitted after withholding tax
$4,400,000
$4,400,000
$5,280,000
$6,630,000
Salvage value
$12,000,000
Exchange rate of $
$0.50
$0.50
$0.50
$0.50
Cash flow to the parent
$2,200,000
$2,200,000
$2,640,000
$9,315,000
PV of parent cash flow @15% rate of discount
$1,913,043
$1,663,516
$1,735,843
$5,325,881
Initial Investment by parent
8. $10,000,000
Cumulative NPV
-$8,086,957
-$6,423,441
-$4687,598
$638,283
If there is an imposition of 20% of withholding tax by the
Indian government, the NPV for a 4-year project will be at
$638,283. If the salvage value is reduced to $10,000,000 with a
10% withholding rate of taxation. Based on the following
criteria, the estimated NPV for the project will be $943,421.
Year 0
Year 1
Year 2
Year 3
Year 4
$ remitted by a subsidiary
$8,000,000
$8,000,000
$6,600,000
$7,800,000
A withholding tax imposed on remitted funds (10%)
$800,000
$800,000
$660,000
$780,000
$ remitted after withholding tax
10. -$6,869,566
-$4,147,449
-$2,194,626
$1,956,303
Finally, considering the withholding tax at a higher level and a
lower salvage value together, the NPV will be at
Year 0
Year 1
Year 2
Year 3
Year 4
$ remitted by a subsidiary
$8,000,000
8,000,000
$6,600,000
$7,800,000
A withholding tax imposed on remitted funds (20%)
$1,600,000
$1,600,000
$1,320,000
$1,560,000
$ remitted after withholding tax
$4,400,000
$4,400,000
$5,280,000
$6,240,000
Salvage value
11. $7,500,000
Exchange rate of $
$0.50
$0.50
$0.50
$0.50
Cash flow to the parent
$2,200,000
$2,200,000
$2,640,000
$6,870,000
PV of parent cash flow @15% rate of discount
$1,930,435
$1,663,516
$1,735,843
$3,927,945,
Initial Investment by parent
$10,000,000
Cumulative NPV
-$8,069,565
-$6,406,049
$4,670,206
$742,261
The first scenario portrays a situation of joint probability with a
$12 million salvage value and a withholding tax rate of 20%.
There is a 12% chance that the value of the firm will be affected
12. by the project. therefore, the firm can accept the software
business project in India since it has a positive NPV and there is
an anticipation of limited loss.
No
Withholding tax rate
Salvage value of the project
NPV
Joint probability
1
10%
$12,000,000
$2,229,867
42%
2
20%
$12,000,000
$638,283
18%
3
10%
$7,500,000
$1,956,303
28%
4
20%
$7,500,000
$742,261
12%
India has a comparative advantage of low labor costs where the
employees are paid higher by the foreign firms in comparison to
the domestic firms. The employees can be encouraged to
produce higher output. Therefore, the Indian government can
attract more foreign investors if they cut down their tax rates to
reduce the import duties and property rights enforcement.
Recommendations
To reduce the exposure of country risks, the Australian firm
13. must consider the following strategies:
(1) Rely on Unique Innovative Technology: The subsidiary
company can employ advanced and innovative technology which
will provide the company a competitive advantage over the
domestic firms and the government (Muzi, Kizil& Ceylan,
2021).. In case of unfair treatment, the MNC can cut off the
supply of this technology.
(2) Use short-term horizon: The Australian company must be
reluctant to recover its cash flow at a frequent and quick period
such that the losses are minimized at the time of adverse
situation. The company can also sell its assets to create further
investment.
(3) Hire Local Labor: The local employees must be preferred
such that in case o adversity of government takeover, the parent
company can pressurize the government to consider the future
of the employees (Giambona, Graham & Harvey, 2017). This
can delimit the government takeover.Conclusion
To invest in a foreign country, the subsidiary company must
have a competitive advantage over the host country. Through
international diversification, an MNC can reduce its exposure to
threats of domestic economic condition and can spread its
losses. The credit rating for the country is at BBB- rating which
reflects a situation of weak revenue generation for the country.
However, the debt stock will remain steady with better progress
to be seen in the upcoming years. After measuring the country's
risk, it can be incorporated into capital budgeting. The
investors must be well informed about the policies that are
announced by the government for a safe business environment
within the country. India needs to improve its credit rating and
explore more productive methods to combat the challenges
posed by the growth and its tax structures.
14. References
Bajrami, H. (2019). Theories of foreign direct investment (FDI)
and the significance of human capital.
Clark, E. (2018). Political Risk in Hong Kong and Taiwan:
Pricing the China Factor. In Evaluating Country Risks for
International Investments: Tools, Techniques and
Applications (pp. 203-219).
Country Risk Retrievd from
https://www.exportfinance.gov.au/resources-news/country-
profiles/asia/india/country-
risk/#:~:text=India's%20political%20risk%20is%20low,and%20
undermine%20the%20economic%20recovery.
Deligonul, S. Z. (2020). Multinational country risk: Exposure to
asset holding risk and operating risk in international
business. Journal of World Business, 55(2), 101041.
Espinoza, D., Morris, J., Baroud, H., Bisogno, M., Cifuentes,
A., Gentzoglanis, A., ... & Vahedifard, F. (2020). The role of
traditional discounted cash flows in the tragedy of the horizon:
another inconvenient truth. Mitigation and Adaptation
Strategies for Global Change, 25(4), 643-660.
Giambona, E., Graham, J. R., & Harvey, C. R. (2017). The
management of political risk. Journal of International Business
Studies, 48(4), 523-533.
Guo, S. Y., & Zheng, M. (2020). Political Risk and Corporate
Tax Behavior: Firm-Level Evidence. Michael, Political Risk and
Corporate Tax Behavior: Firm-Level Evidence (December 30,
2020).
Muzir, E., Kizil, C., & Ceylan, B. (2021). Role of International
Trade Competitive Advantage and Corporate Governance
Quality in Predicting Equity Returns: Static and Conditional
Model Proposals for an Emerging Market. Journal of Risk and
Financial Management, 14(3), 125.
Paul, J., & Singh, G. (2017). The 45 years of foreign direct
investment research: Approaches, advances and analytical
areas. The World Economy, 40(11), 2512-2527.
Rafat, M., & Farahani, M. (2019). The country risks and foreign
15. direct investment (FDI). Iranian Economic Review, 23(1), 235-
260.
COUNTRY RISK INCORPORATING INTO CAPITAL
BUDGETING
1
Foreign Direct
Investment
is an
investment
that a
multinational
c
orporation
makes in a host
country where they act as
a
parent company and ha
ve con
trol and earn
a
private
return.
T
he
collaboration
16. between companies,
the
cross
-
border partners
hip ca
n
facilitate
long
-
term
bu
siness
solutions
.
F
oreign firms
through geographic di
versi
fication can
safeguard themselves from
supply chain
disruption
an
d can enhance the economic
pro
s
p
ects
of both host country and parent
country. One
17. of the perplexing issues faced in international business lies
within the political and
financial
risk in
project investment. Political risk can be defined as the risk
which affects the cash
flow of any company dealing in international business and
investment which is affected by a
change in government action.
A subject matter of paradox gets its exp
osure whe
n several authors
and scholars vouch for the way capital budgeting is explained
and practiced. The general
observation in a corporate finance world is the increase in the
value of shareholders with NPV
being positive. The project cash flow can be
forecaste
d followed by discounting method at a
discounting rate to reflect the price that the capital market is
charging for the risk in cash flow;
hence the derivation for NPV (
Guo & Zheng,2020).
The investors only consider the systematic
risk of the proj
ect while
ignoring the imperfection that is captured in the capital market
in the
case of capital budgeting. It is also believed that that
quantification of the political risk is a
difficult task even for investors.
In this paper, we will explore the coun
18. try's risk
in a broader aspect and incorporate it with
the concepts of capital budgeting. It will also contain empirical
evidence of FDI for an Australian
company, AUF, investing in a software development business in
India. The aim is to investigate
the co
untry
-
spec
ific political
and financial
risk
associated
with
India
and its effect on the capital
budgeting decision
-
making process
. To ensure optimality, the key decision
-
makers often use a
COUNTRY RISK INCORPORATING INTO CAPITAL
BUDGETING 1
Foreign Direct Investment is an investment that a multinational
corporation makes in a host
country where they act as a parent company and have control
and earn a private return. The
collaboration between companies, the cross-border partnership
can facilitate long-term business
solutions. Foreign firms through geographic diversification can
safeguard themselves from
supply chain disruption and can enhance the economic prospects
19. of both host country and parent
country. One of the perplexing issues faced in international
business lies within the political and
financial risk in project investment. Political risk can be defined
as the risk which affects the cash
flow of any company dealing in international business and
investment which is affected by a
change in government action. A subject matter of paradox gets
its exposure when several authors
and scholars vouch for the way capital budgeting is explained
and practiced. The general
observation in a corporate finance world is the increase in the
value of shareholders with NPV
being positive. The project cash flow can be forecasted
followed by discounting method at a
discounting rate to reflect the price that the capital market is
charging for the risk in cash flow;
hence the derivation for NPV (Guo & Zheng,2020). The
investors only consider the systematic
risk of the project while ignoring the imperfection that is
captured in the capital market in the
case of capital budgeting. It is also believed that that
quantification of the political risk is a
difficult task even for investors.
In this paper, we will explore the country's risk in a broader
aspect and incorporate it with
the concepts of capital budgeting. It will also contain empirical
evidence of FDI for an Australian
company, AUF, investing in a software development business in
India. The aim is to investigate
the country-specific political and financial risk associated with
India and its effect on the capital
budgeting decision-making process. To ensure optimality, the
key decision-makers often use a