Capital budgeting requires estimation of a project’s
incremental cash flows - which are determined byestimating worldwide cash flows with and without theproject.
There are two main methods of international capitalbudgeting, centralized and decentralized
Centralized requires exchange rate forecasts
Decentralized requires a local-currency cost of capital.
The method a firm selects should depend on itscomparative advantage in estimating each
By: Rajat Jhingan