1. Compare and contrast NPV and IRR as capital budgeting techniques.
2. What are the main issues that need to be considered in designing and implementing a successful performance evaluation system for a foreign subsidiary?
3. On January 1, 2009, a U.S. firm made an investment in Germany that will generate $5 million annually in depreciation, converted at the current spot rate. Projected annual rates of inflation in Germany and in the United States are 5 percent and 2 percent, respectively. The real exchange rate is expected to remain constant, and the German tax rate is 50 percent.
5. Required: Calculate the expected real value (in terms of January 1, 2009, dollars) of the depreciation charge in year 2013. Assume that the tax write-off is taken at the end of the year.
6. What is the PCAOB? What is its role in audit regulation?
7. What is the oversight role of an audit committee?