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If the project provide the internal rate of return is 10% for project, then it would be
prefer to choose this project, As there are several quantitative methods to analyze the
investments. Such as Payback period, Discounted Payback period, NPV, IRR and
Profitability index. Among these quantitative methods, NPV and IRR provide the very
best and accurate result to opt the investment. As the current project has 10% IRR
which means that this project will provide the 10 percentage of the return over the life
of 5 year of the project. However, cash flows can also generate after this predefined
period also provide the benefit from this project. That why, using the IRR method is best
it consider the time value of money and reinvestment rate.
So as a conclusive, it is better to opt the investment based on the 10% IRR.
If the inflation is 20% and the real rate of interest is 10% then the Nominal rate of
return will be 30%.
There are two concepts of foreign direct investment (FDI) and two matching ways of
measuring it. One is that FDI is a particular form of the flow of capital across
international boundaries. It gives rise to a particular form of international assets for the
home countries, specifically, the value of holdings in entities, typically corporations,
controlled by a home-country resident or in which a home-country resident holds a
certain share of the voting rights. The other concept of direct investment is that it is a
set of economic activities or operations carried out in a host country by firms controlled
or partly controlled by firms in some other (home) country. These activities are, for
example, production, employment, sales, the purchase and use of intermediate goods
and fixed capital, and the carrying out of research.
The former of these two concepts is the one reflected in balance of payments accounts.
The measures of it, flows and stocks of direct investment, are the only virtually
ubiquitous quantitative indicators of FDI. However, if the effects of FDI stem from the
activity of the foreign-owned firms in their host countries, the balance-of-payments
measures have many defects for any examination of these impacts.