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| Teaching Since: | Jul 2017 |
| Last Sign in: | 398 Weeks Ago, 3 Days Ago |
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Company: Motorcycle Protective Gear
Country: Vietnam
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Resources
Read/review the following resources for this activity:
Introduction
Continuing your creation of a MNC, consider the decisions that you made in previous weeks and add to your company using the prompts below.
Activity Instructions
Provide answers to the following MNC components using both information and concepts from the text as well as outside research to support your statements and probable MNC success. You might organize your paper using the headings and statements below to make sure you include all of the appropriate information.
Assessing Exposure to Country Risk
Capital Structure Decisions
Writing Requirements (APA format)
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Week 5 Lecture
FIN616 International Financial Management
Lecture
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Introduction
So far in this course we have reflected upon the risk that is associated with exchange rates and currencies for MNCs. However, there are many other types of risk that MNCs must consider and manage that purely domestic firms are not subjected to. Some additional risk considerations are often called country risk and include political risk, financial risk, host government takeovers, etc. These risks are not stagnant and often change over time. Therefore, international financial managers and MNCs must continue to consider country risk even after investment to ensure that the investment return still outweighs the investment risk.
Another major topic discussed in traditional corporate finance courses is the capital structure and cost of capital. Corporations must implement a capital structure policy that supports the risk that is associated with the calculated cost of capital. However, the calculation of the cost of capital is considerably more difficult as international locations and foreign funds are considered. During this week we will discuss various methods to calculate the cost of capital in a MNC situation as well as how the capital structure of the company can be set using host country characteristics.Â
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