Question 1. What are some specific examples of projects or decisions, which could be made, using, and discounted cash flows analysis within your company or business experience?
Question 2. Why is inflation not a consideration when the basic concept that money has time value is discussed? Inflation does play a role, when determining the specific discount rate to be used. What impact does increasing inflation have on the required return of any project?
Question 3. The heart of discounted cash flows analysis is the assumptions behind the numbers. Once the mechanics of the tool are mastered, then one needs to focus on the assumptions behind the numbers. How might a manager manipulate the assumptions behind a discounted cash flows analysis of a project to ensure a favorable result (e.g. positive NPV)? If you are in a position to review and approve capital projects that have been evaluated using DCF techniques, how should you guard against being manipulated?
Question 4. Multinational companies have a unique set of concerns. If they decide to do a project such as construct a factory, in a foreign country, the profits from that project are normally generated in that nationâ??s currency (e.g. yuan, pounds etc). Currency exchange rate differences can impact the company. For example, if an American firm wants to bring those profits back to the US to invest in a project, what risk does the company face? How might the company hedge or deal with this risk?
Question 5. Analyze a capital project's present value based on expected future net cash flows
Question 6. Please discuss several risks associated with international investment decisions. What might be an example of each of these risks?