Subsidiary versus Parent Perspective

Other Factors to ConsiderUncertain Salvage ValueThe salvage value of an MNC’s project typically has asignificant impact on the project’s NPV.1.Consider scenario analysis to estimate NPV at varioussalvage values.2.Consider estimating break-even salvage value at zero NPV.Breakeven Salvage Value:⎡ CF= ⎢ ∑⎣ (1 + k)tnSVnIO − (1 + k)t⎤⎥⎦© 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use aspermitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.