Module Note | March 2006

Valuing Cross-Border Investments

by Mihir A. Desai and Kathleen Luchs

Abstract

Describes a core module in the International Finance course at Harvard Business School. The module explores how valuation differs in an international context and introduces students to the major issues in cross-border valuations: how to value investments in currencies other than the home currency; how to calculate the appropriate discount rates for projects in different countries; and how and when to incorporate country risk into valuations. The module note provides instructors with an overview of the module, the cases, and the teaching notes and explains how this module fits into the overall International Finance course. Includes a brief description of the framework developed in the course and explains the application of this framework to the cases in this module. Also includes descriptions of the three cases in the module and the analysis required in each case; an explanation of the learning objectives and suggested assignment questions for the cases; and information on additional materials useful in teaching the cases. Concludes with references to the relevant academic literature and a bibliography.

Keywords: International Accounting; Currency Exchange Rate; Investment; Framework; Cross-Cultural and Cross-Border Issues; Body of Literature; Risk Management; Projects; Valuation;

Citation:

Desai, Mihir A., and Kathleen Luchs. "Valuing Cross-Border Investments." Harvard Business School Module Note 206-125, March 2006.