FDI-An APV Treatment

概要

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Foreign Direct Investment (FDI) involves cross border cash flows bringing a host of additional factors into the capital budgeting scenario that make it rather complicated case of investment evaluation. This requires a detailed comprehensive scenario analysis for identifying the financial flows emerging out of such interactions. It, at the same time, necessitates the consideration of FDI as a special case of investment analysis and should not be subjected to a one-point treatment style of traditional discounted cash flow techniques. It calls for the development of an FDI investment evaluation approach that can take care of all the conventional as well non-conventional factors bearing upon such a project. The FDI evaluation model based on value additivity principle proposed in this article is considered to be better than conventional approaches in bringing out the component values and their treatment in the FDI analysis from a variety of aspects e.g. treatment of cash flows, the adjustment of additional risk factors and translation factors. The Adjusted Present Value approach on which the treatment of FDI is based in this article is considered to be more comprehensive and advantageous to the current approaches to the FDI evaluation.
北海道大学の論文