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Lehigh anticipated that future cash flows would also be lower 



1.	Capital Budgeting Logic. Athens, Inc. established a subsidiary in the United Kingdom that was independent of its operations in the United States. The subsidiary- performance was well above what was expected. Consequently, when a British firm approached Athens about the possibility of acquiring the subsidiary, Athens’ chief financial officer implied that the subsidiary was performing so well that it was not for sale. Comment on this strategy.

2.	Capital Budgeting Logic. Lehigh Co. established a subsidiary in Switzerland that was performing below the cash flow projections developed before the subsidiary was established. Lehigh anticipated that future cash flows would also be lower than the original cash flow projections. Consequently, Lehigh decided to inform several potential acquiring firms of its plan to sell the subsidiary. Lehigh then received a few bids. Even the highest bid was very low, but Lehigh accepted the offer. It justified its decision by stating that any existing project whose cash flows are not sufficient to recover the initial investment should be divested. Comment on this statement. 



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