ТHE FINANCIAL APPRAISAL OF THE FOREIGN INVESTMENT PROJECTS

  • Тајана Сердар Assistant, Faculty of Economics, University of Banja Luka
Keywords: discount rate, modified net cash flows, net present value, systematic risk, international capital price

Abstract

Considering global trends in the business world and growing extroversion of the world economies, today's enterprises are faced with the inevitability of investing abroad. Majority of multinational companies set up subsidaries in each country they have the interest to operate. International capital budgeting is defined as decision-making process on long-term investment of financial funds in real business assets abroad. In the viability appraisal of overseas investment projects, it is necessary to consider all the factors that influence evaluation process and choose projects profitable from the standpoint of the parent company. The main inputs in the international capital budgeting are discount rate defining, cash flows appraisal and forecast exchange rate selection. For financial rating of international projects, evaluation is extended by introducing adjusted net cash flow and modified net present value.

Follow-up of the work and the results lead to conclusion that careful international capital budgeting is very significant for existence and further growth of multinational company. With the appreciation of the risk typical for international investment and proffesional appraisal of foreign projects, financial managers will decide to invest in project with the highest net present value and thus achieve the greatest benefits for shareholders of the company.

Downloads

Download data is not yet available.

References

Аrnold, G. Corporate Financial Management. London: Financial Times, Pitman Publishing. 1998.

Bodie, Z.; Kane, A; Marcus, J. A. Investments. New York: McGraw Hill, Inc, 2004

Brealey, R.A.; Myers, S.C. Principles of Corporate Finance. New York: McGraw Hill, Inc, 1991

Brooks, R. Financial Management: Core Concepts. London: Pearson Education, 2010.

Damodaran, A. Корпоративне финансије – теорија и пракса. Пријепоље: ГК Графокартон, 2005.

Ђуричин, Д. Управљање (помоћу) пројеката. Београд: Економски факултет, 2005.

Иванишевић, М.. Пословне финансије. Београд: Економски факултет, 2008.

Микеревић, Д. Финансијски менаџмент. Бања Лука: Економски факултет, 2001.

Микеревић, Д. Стратешки финансијски менаџмент. Бања Лука: Економски факултет, 2005.

Parino, R.; Kidwelll, D. Fundamentals of Corporate Finance. New York: John Wiley& Sons, Inc, 2009.

Пауновић, Б.; Зиповски, Д.. Пословни план, водич за израду. Београд: Економски факултет, 2005

Родић, Ј; Марковић, И.. Пословне финансије са програмом финансијске консолидације. Београд: Савремена администрација, 1986.

Родић, Ј.; Филиповић, М. Пословне финансије. Београд: Београдска пословна школа, 2008.

Clark, J. Francis. Management of Investments. New York: McGraw Hill, 1993.

www.efnfak.ni.ac.rs

www. prsgroup.com

Published
2010-12-31
How to Cite
Сердар, Т. (2010). ТHE FINANCIAL APPRAISAL OF THE FOREIGN INVESTMENT PROJECTS. Acta Economica, 8(13), 225-245. Retrieved from http://ae.ef.unibl.org/index.php/AE/article/view/185
Section
Professional article

Most read articles by the same author(s)

Obs.: This plugin requires at least one statistics/report plugin to be enabled. If your statistics plugins provide more than one metric then please also select a main metric on the admin's site settings page and/or on the journal manager's settings pages.