International Financial Management
14th Edition
ISBN: 9780357130698
Author: Madura
Publisher: Cengage
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Imagine an American MNC. Why it might decide to borrow in a country such as Brazil, where interest rates are high, rather than a country like Germany, where interest rates are low? Discuss why this may be the best strategy for the firm, given your understanding of the relationship between inflation, interest rates, and exchange rate.
There is a situation where investors in the US are looking to Japan as a place where they should invest for a future high rate of return, while the Japanese investors are looking to lower their investments in the US. What is the combined effect on the US dollar value? Please explain.
Determine the key reasons why a multinational corporation might decide to borrow in a country such as Brazil, where interest rates are high, rather than in a country like Switzerland, where interest rates are low. Provide support for your rationale.
What impact does foreign investment have on the weighted average cost of capital calculations?
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- Should firms require higher rates of return on foreign projects than on identical projectslocated at home? Explain.arrow_forwardWhich of the following statements is true of export financing? Governments may promote exports by offering loan guarantees. The Ex-Im Bank finances the export activities of companies all over the world. Small businesses that have just started to export are financially stable and seldom require financing from government agencies. Governments usually offer loans to exporters with above-market interest rates.arrow_forward
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