Biljana Pejović – Faculty of Social Sciences, Bulevar umetnosti 2ª, Belgrade, Serbia
Dragana Trifunović – Faculty of Social Sciences, Bulevar umetnosti 2ª, Belgrade, Serbia
Aleksandra Živaljević – Higher Colleges of Technology, Abu Dhabi, United Arab Emirates
DOI: https://doi.org/10.31410/ITEMA.2020.129
4th International Scientific Conference on Recent Advances in Information Technology, Tourism, Economics, Management and Agriculture – ITEMA 2020, Online/virtual, October 8, 2020, CONFERENCE PROCEEDINGS published by the Association of Economists and Managers of the Balkans, Belgrade; Printed by: SKRIPTA International, Belgrade, ISBN 978-86-80194-36-3, ISSN 2683-5991, DOI: https://doi.org/10.31410/ITEMA.2020
Abstract
By predicting cash flows in the capital budgeting procedure, the profitability of an investment at the international level is determined in advance. Although investing globally provides greater opportunities for earnings, cost reduction and business diversification, all risks posed by international business must be considered when choosing a discount rate. In addition to the risks inherent in cross-border business such as exchange rate risk, country risk, the risks caused by the pandemic crisis, which relate primarily to measures taken by states to protect the population by introducing quarantine, restricting the flow of people, goods and capital, as well as activities that are endangered by a pandemic, must be considered too. If all the risks that determine the discount rate are well assessed, the cash flow forecast will be more accurate.
Keywords
Cash flows, Capital budgeting, Discount rate, Pandemic.
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