Fundamentals of Multinational Finance, 4e (Moffett)

Chapter 16 Multinational Capital Budgeting and Cross-Border Acquisitions

Multiple Choice and True/False Questions

16.1 Complexities of Budgeting for a Foreign Project

1) The traditional financial analysis applied to foreign or domestic projects, to determine the project's
value to the firm is called ________.
A) cost of capital analysis
B) capital budgeting
C) capital structure analysis
D) agency theory
Answer: B
Diff: 1
Topic: 16.1 Complexities of Budgeting for a Foreign Project
Skill: Recognition

2) Which of the following is NOT a basic step in the capital budgeting process?
A) Identify the initial capital invested.
B) Estimate the cash flows to be derived from the project over time.
C) Identify the appropriate interest rate at which to discount future cash flows.
D) All of the above are steps in the capital budgeting process.
Answer: D
Diff: 1
Topic: 16.1 Complexities of Budgeting for a Foreign Project
Skill: Recognition

3) There are no important differences between domestic and international capital budgeting methods.
Answer: FALSE
Diff: 1
Topic: 16.1 Complexities of Budgeting for a Foreign Project
Skill: Recognition

4) Which of the following is NOT a reason why capital budgeting for a foreign project is more complex
than for a domestic project?
A) Parent cash flows must be distinguished from project cash flows.
B) Parent firms must specifically recognize remittance of funds due to differing rules and regulations
concerning remittance of cash flows, taxes, and local norms.
C) There are differing rates of inflation between the foreign and domestic economies.
D) All of the above add complexity to the international capital budgeting process.
Answer: D
Diff: 1
Topic: 16.1 Complexities of Budgeting for a Foreign Project
Skill: Recognition

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5) It is important that firms adopt a common standard for the capital budgeting process for choosing
among foreign and domestic projects.
Answer: TRUE
Diff: 1
Topic: 16.1 Complexities of Budgeting for a Foreign Project
Skill: Recognition

16.2 Project versus Parent Valuation

1) Project evaluation from the ________ viewpoint serves some useful purposes and/but should
________ the ________ viewpoint.
A) local; be subordinated to; parent's
B) local; not be subordinated to; parent's
C) parent's; be subordinated to; local
D) none of the above
Answer: A
Diff: 1
Topic: 16.2 Project versus Parent Valuation
Skill: Recognition

2) A foreign firm that is 20% to 49% owned by a parent is called a/an ________.
A) subsidiary
B) affiliate
C) partner
D) rival
Answer: B
Diff: 1
Topic: 16.2 Project versus Parent Valuation
Skill: Recognition

3) For financial reporting purposes, U.S. firms must consolidate the earnings of any subsidiary that is
over ________ owned.
A) 20%
B) 40%
C) 50%
D) 75%
Answer: C
Diff: 1
Topic: 16.2 Project versus Parent Valuation
Skill: Recognition

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4) Affiliate firms are consolidated on the parent's financial statements on a ________ basis.
A) prorated
B) 50%
C) 75%
D) 100%
Answer: A
Diff: 1
Topic: 16.2 Project versus Parent Valuation
Skill: Recognition

5) For international investments, relative to project cash flows, parent cash flows are often dependent on
the form of financing.
Answer: TRUE
Diff: 1
Topic: 16.2 Project versus Parent Valuation
Skill: Conceptual

6) Which of the following considerations is NOT important for a parent firm when considering foreign
investment?
A) the form of financing
B) remittance of funds at risk due to political considerations
C) differing rates of national inflation
D) All of the above are important considerations.
Answer: D
Diff: 1
Topic: 16.2 Project versus Parent Valuation
Skill: Recognition

16.3 Illustrative Case: Cemex Enters Indonesia

1) Given a current spot rate of 8.10 Norwegian krone per U.S. dollar, expected inflation rates of 6% in
Norway and 3% per annum in the U.S., use the formula for relative purchasing power parity to estimate
the one-year spot rate of krone per dollar.
A) 7.87 krone per dollar
B) 8.10 krone per dollar
C) 8.34 krone per dollar
D) There is not enough information to answer this question.
Answer: C
Diff: 2
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Analytical

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2) When evaluating capital budgeting projects, which of the following would NOT necessarily be an
indicator of an acceptable project?
A) an NPV > $0
B) an IRR > the project's required rate of return
C) an IRR > $0
D) All of the above are correct indicators.
Answer: C
Diff: 1
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Recognition

3) Given a current spot rate of 8.10 Norwegian krone per U.S. dollar, expected inflation rates of 3% in
Norway and 6% per annum in the U.S., use the formula for relative purchasing power parity to estimate
the one-year spot rate of krone per dollar.
A) 7.87 krone per dollar
B) 8.10 krone per dollar
C) 8.34 krone per dollar
D) There is not enough information to answer this question.
Answer: A
Diff: 2
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Analytical

4) When determining a firm's weighted average cost of capital (wacc) which of the following terms is
NOT necessary?
A) the firm's tax rate
B) the firm's cost of debt
C) the firm's cost of equity
D) All of the above are necessary.
Answer: D
Diff: 1
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Recognition

5) When determining a firm's weighted average cost of capital (wacc) which of the following terms is
NOT necessary?
A) the firm's weight of equity financing
B) the accumulated depreciation
C) the firm's weight of debt financing
D) All of the above are necessary to determine a firm's wacc.
Answer: B
Diff: 1
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Recognition

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6) Of the following, which would NOT be considered an initial outlay at time 0 (today)?
A) investment in new equipment
B) initial investment in additional net working capital
C) shipping and handling costs associated with the new investment
D) All of the above are initial outlays.
Answer: D
Diff: 1
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Recognition

Instruction 16.1:
Use the information for the following question(s).

The Wheel Deal Inc., a company that produces scooters and other wheeled non-motorized recreational
equipment is considering an expansion of their product line to Europe. The expansion would require a
purchase of equipment with a price of euro 1,200,000 and additional installation of euro 300,000
(assume that the installation costs cannot be expensed, but rather, must be depreciated over the life of
the asset). Because this would be a new product, they will not be replacing existing equipment. The new
product line is expected to increase revenues by euro 600,000 per year over current levels for the next 5
years, however; expenses will also increase by euro 200,000 per year. (Note: Assume the after-tax
operating cash flows in years 1-5 are equal, and that the terminal value of the project in year 5 may
change total after-tax cash flows for that year.) The equipment is multipurpose and the firm anticipates
that they will sell it at the end of the five years for euro 500,000. The firm's required rate of return is
12% and they are in the 40% tax bracket. Depreciation is straight-line to a value of euro 0 over the 5-
year life of the equipment, and the initial investment (at year 0) also requires an increase in NWC of
euro 100,000 (to be recovered at the sale of the equipment at the end of five years). The current spot rate
is $0.95/euro , and the expected inflation rate in the U.S. is 4% per year and 3% per year in Europe.

7) Refer to Instruction 16.1. What are the annual after-tax cash flows for the Wheel Deal project?
A) euro 400,000
B) euro 240,000
C) euro 120,000
D) euro 360,000
Answer: D
Diff: 2
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Analytical

8) Refer to Instruction 16.1. What is the initial investment for the Wheel Deal project?
A) $1,500,000
B) euro 1,600,000
C) $1,600,000
D) euro 1,500,000
Answer: A
Diff: 2
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Analytical

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9) Refer to Instruction 16.1. What is the NPV of the European expansion if Wheel Deal first computes
the NPV in euros and then converts that figure to dollars using the current spot rate?
A) $1,520,000
B) $1,684,210
C) -$75,310
D) -$71,544
Answer: D
Diff: 2
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Analytical

10) Refer to Instruction 16.1. In euros, what is the NPV of the Wheel Deal expansion?
A) euro 1,524,690
B) $1,611,317
C) -euro 75,310
D) -euro 111,317
Answer: C
Diff: 2
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Analytical

11) Refer to Instruction 16.1. What is the IRR of the Wheel Deal expansion?
A) 14.4%
B) 10.3%
C) 12.0%
D) 8.6%
Answer: B
Diff: 2
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Analytical

12) Refer to Instruction 16.1. The European expansion would have a greater NPV in dollar terms if the
euro appreciated in value over the five-year life of the project and the project had a positive NPV, other
things equal.
Answer: TRUE
Diff: 1
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Conceptual

13) The only proper way to estimate the NPV of a foreign project is to discount the appropriate cash
flows first and then convert them to the domestic currency at the current spot rate.
Answer: FALSE
Diff: 1
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Conceptual

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14) Benson Manufacturing has an after-tax cost of debt of 7% and a cost of equity of 12%. If Benson is
in a 30% tax bracket, and finances 40% of assets with debt, what is the firm's wacc?
A) 11.20%
B) 10.36%
C) 9.72%
D) 7.68%
Answer: A
Diff: 2
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Analytical

15) If a firm undertakes a project with ordinary cash flows and estimates that the firm has a positive
NPV, then the IRR will be ________.
A) less than the cost of capital
B) greater than the cost of capital
C) greater than the cost of the project
D) cannot be determined from this information
Answer: B
Diff: 1
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Recognition

16) Generally speaking a firm's cost of ________ capital is greater than the firm's ________.
A) debt; equity
B) debt; wacc
C) equity; wacc
D) None of the above is true.
Answer: C
Diff: 1
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Recognition

17) When estimating a firm's cost of equity capital using the CAPM, you need to estimate
A) the risk-free rate of return.
B) the expected return on the market portfolio.
C) the firm's beta.
D) all of the above.
Answer: D
Diff: 1
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Recognition

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18) Calculate the cost of equity for Boston Industries using the following information: The cost of debt
is 7%, the corporate tax rate is 40%, the rate on Treasury Bills is 4%, the firm has a beta of 1.1, and the
expected return on the market is 12%.
A) 12.8%
B) 12.6%
C) 13.2%
D) 6.6%
Answer: A
Diff: 2
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Analytical

19) ________ is the risk that a foreign government will place restrictions such as limiting the amount of
funds that can be remitted to the parent firm, or even expropriation of cash flows earned in that country.
A) Exchange risk
B) Foreign risk
C) Political risk
D) Unnecessary risk
Answer: C
Diff: 1
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Recognition

20) Which of the following is NOT an example of political risk?

A) There could be expropriation of cash flows by a foreign government.
B) The U.S. government restricts trade with a foreign country where your firm has investments.
C) The foreign government nationalizes all foreign-owned assets.
D) All of the above are examples of political risk.
Answer: D
Diff: 1
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Recognition

21) Generally speaking, a firm wants to receive cash flows in a currency that is ________ relative to
their own, and pay out in currencies that are ________ relative to their home currency.
A) appreciating; depreciating
B) depreciating; depreciating
C) appreciating; appreciating
D) depreciating; appreciating
Answer: A
Diff: 1
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Conceptual

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22) When dealing with international capital budgeting projects, the value of the project is NOT sensitive
to the firm's cost of capital.
Answer: FALSE
Diff: 1
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Conceptual

23) Projects that have ________ are often rejected by traditional discounted cash flow models of capital
budgeting.
A) long lives
B) cash flow returns in later years
C) high risk levels
D) all of the above
Answer: D
Diff: 1
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Recognition

TABLE 16.1
Use the information to answer the following question(s).

Jensen Aquatics Inc., which manufactures and sells scuba gear worldwide, is considering an investment
in either Europe or Great Britain. Consider the following cash flows for each project, assume a 12%
wacc, and consider these to be average risk projects for the firm. Answer the questions that follow.

24) Refer to Table 16.1. The NPV for the British investment is estimated at ________.
A) $3,092
B) $6,420
C) £3,092
D) $0
Answer: A
Diff: 2
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Analytical

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25) Refer to Table 16.1. The NPV for the European investment is estimated at ________.
A) euro 4,945
B) $4,945
C) $6,420
D) euro 6,420
Answer: B
Diff: 2
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Analytical

26) Refer to Table 16.1. Which of the following best summarizes the preliminary results of the
investment analysis for the two prospective investments?
A) The British investment should be accepted, the European investment rejected.
B) The British investment is superior to the European investment.
C) Both investments are acceptable.
D) None of the above is true.
Answer: C
Diff: 1
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Conceptual

27) Refer to Table 16.1. If the euro was forecast to remain constant at $1.00/euro throughout the
investment period, how would the investment decision now be characterized?
A) The project would be even better than forecast.
B) The British investment should be chosen over the European investment.
C) The NPV is $6,420.
D) All of the above are true.
Answer: A
Diff: 1
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Analytical

28) When a foreign project is analyzed from the parent's point of view, the additional risk that stems
from it's "foreign" location is typically measured by ________ or ________.
A) adjusting the discount rates; adjusting the timing
B) adjusting the timing; adjusting the cash flows
C) adjusting the discount rates; adjusting the cash flows
D) none of the above
Answer: C
Diff: 1
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Conceptual

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29) Which is NOT considered a shortcoming of the parent simply adjusting discount rates to account for
the additional risk that stems from a project's foreign location?
A) Cash flows are already highly subjective.
B) Two-sided risk in that foreign currency may appreciate or depreciate.
C) Increased sales volume might offset the lower value of a local currency.
D) These are all shortcomings associated with discount rate adjustment.
Answer: A
Diff: 1
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Conceptual

30) Hydrotech Manufacturing of Houston Texas expects to receive dividends each year from a foreign
subsidiary for the next 5 years. The dividend is expected to grow at a rate of 7% per year. If the euro
appreciates in value against the dollar at a rate of 2% per year over the life of the dividends, then the
present value of the euro dividends to Hydrotech will be ________ if there had been no change in the
relative values of the euro and dollar.
A) less than
B) greater than
C) the same as
D) There is not enough information to answer this question.
Answer: B
Diff: 1
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia
Skill: Conceptual

16.4 Real Option Analysis

1) Real option analysis allows managers to analyze all of the following EXCEPT
A) the option to defer.
B) the option to abandon.
C) the option to alter capacity.
D) All of the above may be analyzed using real option analysis.
Answer: D
Diff: 1
Topic: 16.4 Real Option Analysis
Skill: Recognition

2) At its core, real option analysis is a cross between decision-tree analysis and pure option-based
valuation.
Answer: TRUE
Diff: 1
Topic: 16.4 Real Option Analysis
Skill: Conceptual

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3) Real option analysis is a particularly powerful device when addressing potential investment projects
________.
A) that do not commence until future dates.
B) with extremely long life spans.
C) both A and B.
D) None of the above.
Answer: C
Diff: 1
Topic: 16.4 Real Option Analysis
Skill: Conceptual

4) Real option analysis treats cash flows in terms of future value in a negative sense, whereas DCF treats
future cash flows positively.
Answer: FALSE
Diff: 1
Topic: 16.4 Real Option Analysis
Skill: Recognition

16.5 Project Financing

1) Project financing is the arrangement of financing for very large individual long-term capital projects.
Answer: TRUE
Diff: 1
Topic: 16.5 Project Financing
Skill: Recognition

2) Which of the following is NOT a factor critical to the success of project financing?
A) separability of the project from its investors
B) long-lived and capital intensive singular projects
C) cash flow predictability from third part commitments
D) All of the above are critical factors for project financing.
Answer: D
Diff: 1
Topic: 16.5 Project Financing
Skill: Conceptual

16.6 Cross-Border Mergers and Acquisitions

1) The process of acquiring an enterprise anywhere in the world has the following common elements
EXCEPT ________.
A) identification and valuation of the target
B) the tender offer
C) management of the post-acquisition transition
D) All of the above are common elements in the process.
Answer: D
Diff: 1
Topic: 16.6 Cross-Border Mergers and Acquisitions
Skill: Recognition

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2) Which of the following would NOT be a potential reason for firms to pursue a cross-border merger or
acquisition?
A) gaining access to strategic proprietary assets
B) gaining market power and dominance
C) diversification and the spreading of risk
D) All of the above are potential reasons for an M & A.
Answer: D
Diff: 1
Topic: 16.6 Cross-Border Mergers and Acquisitions
Skill: Recognition

3) Generally speaking, currency risk decreases as time prior to acquisition of a foreign firm decreases.
Answer: TRUE
Diff: 1
Topic: 16.6 Cross-Border Mergers and Acquisitions
Skill: Conceptual

Essay Questions

16.1 Complexities of Budgeting for a Foreign Project

1) Explain how political risk and exchange rate risk increase the uncertainty of international projects for
the purpose of capital budgeting.
Answer: The evaluation of foreign projects must consider several risks that are either nonexistent or
much less important in domestic capital budgeting. First, if revenues and expenses are in a foreign
currency, then the parent firm must estimate the exchange rate at which the foreign currency will be
converted into the domestic currency. To estimate future exchange rates, the parent firm must estimate
expected rates of inflation and interest rates in both countries, economic growth in each country, as well
as consumer preferences and tastes in more than one country. Then, aspects of political risk must be
considered. What is the likelihood that all or part of the cash flows accruing to the parent firm will be
restricted through some political act? The firm must now consider the possibility of changing tax rates,
new taxes, and additional restrictions on the flow of funds. Furthermore, local norms may differ from
usual firm practice in terms of financing or dividend policy. Domestic capital budgeting may seem quite
easy in comparison.
Diff: 3
Topic: 16.1 Complexities of Budgeting for a Foreign Project

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16.2 Project versus Parent Valuation

1) The authors highlight a strong theoretical argument in favor of analyzing any foreign project from the
viewpoint of the parent. Provide at least three reasons why the parent's viewpoint is superior to the local
viewpoint and give an example of when the local viewpoint fails to maximize the value of the firm.
Answer: A project might have a positive NPV from the local viewpoint, but fail to consider relevant
cash flows from the parent viewpoint. For example, a positive NPV project in one country may result
from the erosion of revenues in another. A local manager would not necessarily be expected to be aware
of such erosion. It may not be possible to remit all or part of the local cash flows to the parent company
and reinvestment opportunities in the local economy may be inferior to what the parent could do
elsewhere, thus, a less than maximum use of funds. Political and exchange rate risk add to the
uncertainty of cash flows and thus increase the required rate of return by stockholders. Cash flows may
be more difficult to estimate especially long-term cash flows in lesser-developed countries.
Diff: 3
Topic: 16.2 Project versus Parent Valuation

16.3 Illustrative Case: Cemex Enters Indonesia

1) Capital budgeting typically requires some type of sensitivity analysis. In the case of international
capital budgeting from the project perspective, analysts consider political risk, foreign exchange risk and
foreign exchange risk. Identify and discuss the important aspects of these two types of risk
considerations.
Answer: Political risk is identified as the risk that the target firm's government may block or delay the
repatriation of funds to the parent firm. The capital budgeting impact of such a delay or expropriation of
funds must consider:
1. When the expropriation occurs, in terms of number of years after the business began
operation
2. How much compensation the foreign government will pay, and how long after expropriation
the payment will be made
3. How much debt is still outstanding to foreign lenders, and whether the parent will have to pay this
debt because of its parental guarantee
4. The tax consequences of the expropriation
5. Whether the future cash flows are forgone

Foreign exchange risk involves the unexpected change in value of foreign-denominated cash flows when
they are received by the parent firm. Such risk can be partially offset with derivative contracts and these
costs must be computed into the cost of the project. However, unexpected changes may still occur and
the effect of unexpected changes should be considered.
Diff: 3
Topic: 16.3 Illustrative Case: Cemex Enters Indonesia

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16.4 Real Option Analysis

1) What is real option analysis? How does it differ from the discounted cash flow approach to project
evaluation? Why do some decision-makers prefer the real option approach over the DCF approach?
Answer: Real options is a different way of thinking about investment values.At its core, it is a cross
between decision-tree analysis and pure option-based valuation. The DCF approach has long had its
critics. Investments that have long lives, cash flow returns in later years, or higher levels of risk than
those typical of the firm's current business activities are often rejected by traditional DCF financial
analysis.

Real option analysis treats cash flows in terms of future value in a positive sense, whereas DCF treats
future cash flows negatively (on a discounted basis). Real option analysis is a particularly powerful
device when addressing potential investment projects with extremely long life spans, or investments that
do not commence until future dates. Real option analysis acknowledges the way information is gathered
over time to support decision making. Management learns from both active (searching it out) and
passive (observing market conditions) knowledge gathering and then uses this knowledge to make better
decisions.
Diff: 3
Topic: 16.4 Real Option Analysis

16.5 Project Financing

1) What is project financing and what are the factors critical to its success?
Answer: Project finance refers to the arrangement of financing for long-term capital projects, large in
scale, long in life, and generally high in risk. Often refers to large scale projects that had traditionally
been funded by governments. Factors critical to the success of project financing are as follows.

Separability of the Project from Its Investors. The project is established as an individual legal entity,
separate from the legal and financial responsibilities of its individual investors. This not only serves to
protect the assets of equity investors, but also it provides a controlled platform upon which creditors can
evaluate the risks associated with the singular project, the ability of the project's cash flows to service
debt, and to rest assured that the debt service payments will be automatically allocated by and from the
project itself (and not from a decision by management within an MNE).

Long-Lived and Capital-Intensive Singular Projects. Not only must the individual project be separable
and large in proportion to the financial resources of its owners, but also its business line must be singular
in its construction, operation, and size (capacity).The size is set at inception, and is seldom, if ever,
changed over the project's life.

Cash Flow Predictability from Third Party Commitments.

Finite Projects with Finite Lives. Even with a longer-term investment, it is critical that the project have a
definite ending point at which all debt and equity has been repaid. There is no capital appreciation, but
only cash flow.
Diff: 3
Topic: 16.5 Project Financing

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16.6 Cross-Border Mergers and Acquisitions

1) Compared to a greenfield investment, list advantages and disadvantages of a cross-border merger or

acquisition.
Answer: As opposed to greenfield investment, a cross-border acquisition has a number of significant
advantages. First and foremost, it is quicker. Greenfield investment frequently requires extended periods
of physical construction and organizational development. By acquiring an existing firm, the MNE
shortens the time required to gain a presence and facilitate competitive entry into the market. Second,
acquisition may be a cost-effective way of gaining competitive advantages such as technology, brand
names valued in the target market, and logistical and distribution advantages, while simultaneously
eliminating a local competitor. Third, specific to cross-border acquisitions, international economic,
political, and foreign exchange.

As with all acquisitions - domestic or cross-border - there are problems of paying too much or suffering
excessive financing costs. Melding corporate cultures can be traumatic. Managing the post-acquisition
process is frequently characterized by downsizing to gain economies of scale and scope in overhead
functions. This results in nonproductive impacts on the firm as individuals attempt to save their own
jobs. Internationally, additional difficulties arise from host governments intervening in pricing,
financing, employment guarantees, market segmentation, and general nationalism and favoritism. In
fact, the ability to successfully complete cross-border acquisitions may itself be a test of competency of
the MNE when entering emerging markets.
Diff: 3
Topic: 16.6 Cross-Border Mergers and Acquisitions

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