INTERNATIONAL CAPITAL BUDGETING DECISIONS: AN APPLICATION

Abstract

When that multinational companies are investing in another country, usually they have to struggle with the risks specific to the country. The success of the company in the management of risks is an important factor in achieving competitive advantage. Within ?international capital budgeting? it is possible to analyze the evaluation methods which are used in order to determine the risks which are faced by multinational corporations in a foreign country and are associated with interest rate, inflation and exchange rate. In this study is described capital budgeting other words international capital budgeting which multinational companies use in assessing foreign direct investments. International capital budgeting is used the same theoretical background with local capital budgeting. However, international capital budgeting are available some complexities. In the study was focused on the net present value method. As a result, it offers a more flexible structure to companies in the evaluation of the FDI decisions - 'Adjusted Present Value' method has been proposed.