Week 1 HMWK

Week 1 HMWK - Jose Mendez WEEK 1 Chapter Questions(20 Points FI565 CHAPTER 1 7(2 Points Benefits and Risks of International Business As an overall

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Jose Mendez 10/30/2010 WEEK 1 - Chapter Questions (20 Points) - FI565 CHAPTER 1 7. (2 Points) Benefits and Risks of International Business. As an overall review of this chapter, identify possible reasons for growth in international business. Then, list the various disadvantages that may discourage international business. 23. (2 Points) Valuation of an MNC. Yahoo! has expanded its business by establishing portals in numerous countries, including Argentina, Australia, China, Germany, Ireland, Japan, and the U.K. It has cash outflows associated with the creation and administration of each portal. It also generates cash inflows from selling advertising space on its website. Each portal results in cash flows in a different currency. Thus, the valuation of Yahoo! is based on its expected future net cash flows in Argentine pesos after converting them into U.S. dollars, its expected net cash flows in Australian dollars after converting them into U.S. dollars, and so on. Explain how and why the valuation of Yahoo! would change if most investors suddenly expected that that the dollar would weaken against most currencies over time. If the dollar weakens against most currencies it cash outflows in dollars will increase and its inflow of foreign currency decrease since the dollar is now comparatively cheaper. A
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This note was uploaded on 12/05/2010 for the course MBA FIN 565 taught by Professor Lee during the Spring '10 term at DePaul.

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Week 1 HMWK - Jose Mendez WEEK 1 Chapter Questions(20 Points FI565 CHAPTER 1 7(2 Points Benefits and Risks of International Business As an overall

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