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When conducting a capital budgeting analysis and attempting to account for effects of exchange rate movements...

When conducting a capital budgeting analysis and attempting to account for effects of exchange rate movements for a foreign project, inflation _______ included explicitly in the cash flow analysis, and debt payments by the subsidiary _______ included explicitly in the cash flow analysis.

should be; should be

should definitely not be; should definitely not be

should definitely not be; should be

should be; should definitely not be

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Answer #1

Ans should be; should be

When conducting a capital budgeting analysis and attempting to account for effects of exchange rate movements for a foreign project, inflation should be included explicitly in the cash flow analysis, and debt payments by the subsidiary should be included explicitly in the cash flow analysis.

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