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- Title
Multinational Capital Budgeting: Foreign Investment under Subsidy.
- Authors
Gordon, Sara L.; Lees, Francis A.
- Abstract
The article discusses issues related to multinational capital budgeting, focusing on the example of a 1977 investment by the Volkswagen automobile company in Pennsylvania, which the state subsidized. A discounted cash flow analysis of the factors involved is presented. The necessary eclecticism of foreign investment theory is discussed. Capital budgeting techniques are used to measure rates of return. The use of transfer pricing is addressed and investment incentives are analyzed. The importance of establishing a sound framework for cost-benefit evaluations is stressed.
- Subjects
CAPITAL budget; FOREIGN investments; VOLKSWAGEN AG; ECONOMIC policy; SUBSIDIES; DISCOUNTED cash flow; INTERNATIONAL business enterprises; CORPORATE finance; TRANSFER pricing; INTERNATIONAL finance
- Publication
California Management Review, 1982, Vol 25, Issue 1, p22
- ISSN
0008-1256
- Publication type
Article
- DOI
10.2307/41164990