Beruflich Dokumente
Kultur Dokumente
=
n
t
t
m
j
t j t j
k
1 =
1
, ,
1
ER E CF E
= Value
E (CF
j,t
) = expected cash flows in currency j to be received
by the U.S. parent at the end of period t
E (ER
j,t
) = expected exchange rate at which currency j can
be converted to dollars at the end of period t
k = weighted average cost of capital of the parent
Parents Capital Structure
Decisions
A17 - 34
Introduction to the Cost of Capital
Comparing the Costs of Equity and Debt
Cost of Capital for MNCs
- Size of Firm
- Access to International Capital Markets
- International Diversification
- Exposure to Exchange Rate Risk
- Exposure to Country Risk
Chapter Review
A17 - 35
Chapter Review
Cost of Capital for MNCs continued
Cost of Capital Comparison Using the
CAPM
Implications of the CAPM for an MNCs
Risk
A17 - 36
Chapter Review
Costs of Capital Across Countries
Country Differences in the Cost of Debt
Country Differences in the Cost of Equity
Combining the Costs of Debt and Equity
Using the Cost of Capital for Assessing
Foreign Projects
Derive NPVs Based on the WACC
Adjust the WACC for the Risk Differential
A17 - 37
Chapter Review
The MNCs Capital Structure Decision
Influence of Corporate Characteristics
Influence of Country Characteristics
Interaction Between Subsidiary and Parent
Financing Decisions
Impact of Increased Debt Financing by the
Subsidiary
Impact of Reduced Debt Financing by the
Subsidiary
A17 - 38
Chapter Review
Using a Target Capital Structure on a
Local versus Global Basis
Offsetting a Subsidiarys Abnormal Degree
of Financial Leverage
Limitations of Offsets
Differences in Financing Tendencies
Among Countries
Impact of Capital Structure Decisions on
an MNCs Value