Corporate Finance and

Public Policy

Multinational Financial
Management

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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Tonight
■ Discuss Presentations
■ Apple Case
■ Tokyo Disneyland Case
■ Discuss Exam (if time permits -
otherwise next week)

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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2
Definitive Presentations approx.
40 min.
Last  Name First  Name Policy Order

Stone Tyler Yes Account  Capitalism  Act     1

Corporate  Tax  Rates  in  

Dedekarginoglu Sule Yes 2
Turkey
Corporate  
Sacco Helen Yes 3
Accountability  Act

Carrasco Gabriela Yes Carbon  tax  in  Chile 4

Medina Adrian Yes ACA  2%  tax 5

Creath Samantha Yes Prop  C 6

Ruben Emma Yes Climate  Policies 7

Steinberg Adam Yes QuanKtaKve  Easing 8

McKenzie Chloe   Yes Dodd  Frank  Rollback 9

Exploring  NAFTA  vs  

Worthen Sarah Yes 10
USMCA
Corporate  Debt/De-­‐
Zhang Qi Yes 11
leveraging    in  China  
 “Maybe” Presentations
Last  Name First  Name Policy

Planes Divine-­‐Asia Maybe-­‐  if  Kme  permits The  Volcker  Rule    of  2018
Eliza French Maybe-­‐  if  Kme  permits Universal  Basic  Income
Luz  Mila Lancheros Maybe-­‐  if  Kme  permits Colombia  tax  reform  
Fishman Jackie Maybe-­‐  if  Kme  permits Tax  Cuts  &  Jobs  Act  of  2017
Pierson Erin Maybe-­‐  if  Kme  permits TARP  
De  Los  Santos Emmily Maybe-­‐  if  Kme  permits Opportunity  Funds  and  Zones  
Wu Hongye Maybe-­‐  if  Kme  permits Universal  Postal  Union  
Howe Nicole Maybe-­‐  if  Kme  permits Tax  Cuts  and  Jobs  Act  
Shaia Nicole Maybe-­‐  if  Kme  permits Accountable  Capitalism  Act
Heinke Sophia Maybe-­‐  if  Kme  permits The  Common  Consolidated  Corporate  Tax  Base
Bowles Charles Maybe-­‐  if  Kme  permits CreaKon  of  the  CFPB
Flores Erika Maybe-­‐  if  Kme  permits BCA  2011  
Epelman Natalie Maybe-­‐  if  Kme  permits Brexit  
Starke Carolyn Maybe-­‐  if  time  permits The  CHOICE  Act    
Niba Royce Maybe-­‐  if  time  permits Accountable  Capitalism  Act
Feit Gideon   Maybe-­‐  if  time  permits JCPOA
Feng   Yunting Maybe-­‐if  time  permits   Lending  rate  liberalization  in  China
Miller Thomas Maybe  -­‐  if  time  permits Tax  Cuts  and  Jobs  Act
Chrysikopoulou Sofia Maybe-­‐  it  time  permits   NAFTA  

~30 minutes,will ask for volunteers,note highlighted

duplicates will be combined as discussion, will give consideration
for submitted slides even if no time for presenting
Presentations
■ ~3 Minutes
■ Describe Policy

■ Brief History

■ One impact on Corporate Finance

■ Slides Optional - not to exceed 3

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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
5
 Intrinsic Value in a Global Context
Currency
Regulatory exchange Culture
systems rates

Free cash flow

(FCF)

FCF1 FCF∞ FCF2

Value = + + ···+
(1 + WACC)1 (1 + WACC)2 (1 + WACC)∞

Weighted average
cost of capital
(WACC)

Cost of debt
Global financial markets Political risk
Cost of equity 6

© 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
What is a multinational
corporation?
■ A multinational corporation is one that
operates in two or more countries.
■ At one time, most multinationals
produced and sold in just a few
countries.
■ Today, many multinationals have world-
wide production and sales.
7

© 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Multinational Capital Budgeting
Decisions
■ Foreign operations are taxed locally,
and then funds repatriated may be
subject to U.S. taxes.
■ Foreign projects are subject to political
risk.
■ Funds repatriated must be converted to
U.S. dollars, so exchange rate risk
must be taken into account.
8

© 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Potential actions by a host
government that would
reduce the value of a
Political Risks company’s investment.

■ taxes
■ spending
■ regulation
■ currency valuation
■ trade tariffs
■ labor laws such as the minimum
wage
■ environmental regulations
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
9
Why do firms expand into 

other countries?
■ To seek new markets.
■ To seek new supplies of raw materials.
■ To gain new technologies.
■ To gain production efficiencies.
■ To avoid political and regulatory
obstacles.
■ To reduce risk by diversification.
10

© 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Major Factors Distinguishing Multinational
from Domestic Financial Management
■ Currency differences
■ Economic and legal differences
■ Language differences
Responsiveness
■ Cultural differences Meeting Style
Employees/Benefits
■ Government roles Work Ethics
Management Roles
■ Political risk Seniority

11

© 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Foreign Capital Budgeting
■ The cost of capital may be different for a
foreign project
because foreign projects may be more or less
■

risky
■ Foreign Project Capital Budgeting Process
■ Project future expected cash flows,
denominated in foreign currency
■ Convert the future expected foreign cash
flows into US dollars.
■ Discount at risk-adjusted cost of capital
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12
Foreign Project Analysis
■ Let’s look at the Disney Case

13

© 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.