1. International Capital Budgeting and APV Concepts Answer the following: a) What is the difference between the APV approach and the NPV approach of evaluating a capital budgeting project? When should you use the APV approach? b) Suppose you are analyzing the projected profitability of an international subsidiarys cash flows from the parents perspective that would result from a potential capital investment made by the subsidiary in Indonesia. How should you handle each of the following in calculating the cash flows that come to the parent? Be specific. i. A decrease of $200,000 per year in the transfer price of intermediate goods charged to the subsidiary that will result from the new investment. ii. In order to conserve cash for the parents operations, building a production facility in Indonesia causes the parent firm to dissolve a joint venture with a Malaysian firm that has generated $2,000,000 in profitability per year to the parent firm. c) Your firm is considering making a multimillion dollar investment in an emerging market country that has a history of anti-business sentiment and a record of corruption. You believe the current environment is much better than in the past, but your boss is still concerned. She has asked you to suggest investment methods and repayment procedures to minimize the financial and political risk. Please suggest entry and payment methods that will limit the risks.