The Npv Method To Use In Cross-border Capital Budget

With the further deepen of open degree of our country, more and more multinational enterprises will make the investment in our country, but because the risk of multinational investment is greater than the risk of general domestic investment, it need to make a careful multinational capital budget analysis, the multinational capital budget is much more complicated than general domestic capital budget, the reason is not only making the analysis of the general capital budget, but also considering the inflation rate between two countries , the regulation of the tax policy, exchange rate ,etc. At present among traditional methods of multinational capital budget,method of NPV is considered to be the more scientific. So method of NPV has got extensive application. This paper adopts method of NPV as the method of the multinational capital budget. This paper combines the special factor of influencing the multinational capital budget such as inflation rate, the tax policy,exchange rate on the basis of introduction of method of NPV. The expand method of NPV is able to apply on the multinational capital budget directly. In order to explain the theory more directly, this paper adopts the project of moving and expanding of Western Gypsum Building Materials Co.Ltd. of Chongqing as case. This paper adopts method of NPV on multinational capital budget analysis, pays attention to the special factors influencing the multinational capital budget such as inflation rate, the tax policy , exchange rate.