Estimating Project Cash Flows

MOD 3 Estimating Project Cash Flows and Foreign direct investments
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Background
For multinational corporations and foreign investors, geopolitical, economic and currency risks influence investment opportunities. Hence, countries having stable macroeconomic policies, open trade and democratic accountability are more likely to be preferred by foreign investors. Foreign Direct Investment (FDI) potentially improves the growth prospects for host countries, highlighting the need for countries to attract more FDI. According to Kearney, (2015), developed nations are the safest bet for foreign direct investment. This is a marked change from optimism in the growth of emerging economies which were performing well before the global downturn. Economic uncertainties and market volatility influence investor confidence to chose the most viable investment opportunities at the global scale (Kearney, 2015).
Canada
The U.K. Canada and Mexico are attractive to US investor. The UK and Canada are both English speaking countries, and there would be less culture shock or misunderstandings while there is protection of private property in the countries laws. One of the main concerns in Canada is the likely effect of rising job losses or rise interest, which would reduce the disposable income of borrowers (Marr, 2015). Another concern for investing in Canada is the tax systems, which is complicated. Even though, the household levels have been rising over time, the country’s economic outlook is positive (Marr, 2015). In any case, there are low-interest rates, meaning that the debt serving charges are low, and unlikely to affect the consumption levels negatively.
There are low political risks, as there is stability, with Canada an open society. Concerns about the Canadians’ appetite for debt is a concern if the trend continues, since the mortgage, education and cost of acquiring cars is likely to put more young adults in a cycle of debt. The plunge oil price has meant that the county is likely to report more job losses in the energy sector driving up the unemployment rate in the country. With low borrowing costs, there is a boom in home sales, but there is a risk of rising home cost as well a housing bubble in future.
Mexico
Even though, the main language in Mexico, America’s southern neighbor is Spanish, there is untapped potential particularly in the energy sector. Mexico’s strategic location supports that the case for improved transportation logistics developing into the U.S, with exports to the U.S at low transportation cost (Embamex.sre.gob.mx, 2015). Mexico is also a major player among the countries in t...