3. Some large companies based in Latin American countries could borrow funds (through issuing bonds or borrowing from U.S. banks) at an inter- est rate that would be substantially less than the interest rates in their own countries. Assuming that they are perceived to be creditworthy in the United States, why might they still prefer to bor- row in their local countries when ﬁnancing local projects (even if they incur interest rates of 80 per- cent or more)?

3. Some large companies based in Latin American countries could borrow funds (through issuing bonds or borrowing from U.S. banks) at an inter- est rate that would be substantially less than the interest rates in their own countries. Assuming that they are perceived to be creditworthy in the United States, why might they still prefer to bor- row in their local countries when ﬁnancing local projects (even if they incur interest rates of 80 per- cent or more)?

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter18: Long-term Debt Financing

Section: Chapter Questions

Problem 5ST

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