FOREIGN EXCHANGE AND CROSS-BORDER VALUATION

Should a corporate financial manager analyze a cross-border investment proposal from the perspective of the foreign currency or the home currency? The conventional wisdom among economists is that it doesn't matter-the valuation of an asset should be the same in one currency as in another, given the spot FX rate. This assertion implies that it is irrelevant whether we analyze an overseas investment's NPV in the home currency or the foreign currency, as long as we use consistent cross-border conversions. 2004 Morgan Stanley.