3616_Week 9_CWEE - 15-1 WTO members 15-2 FINS3616...

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Unformatted text preview: 15-1 WTO members 15-2 FINS3616 International Business Finance Week 9 Lecturer: Claudia Wee 15-3 Final Exam Format 2.5 hours + 10 min reading time Format: 40 MCQ (25%) & 4 short answer questions (20%) Calculator: UNSW-approved calculator 15-4 Week 11 Lecture Venue & Time Week 11 Monday (Oct 3) Labor Day uni not in operation. Lecture rescheduled to Friday (Oct 7) 4-6pm CLB 7. 15-5 Chapter 15 Multinational Capital Structure and Cost of Capital Learning objectivesPThe MNCs optimal capital structure PProject valuation and the cost of capital The impact of market imperfections WACC versus APV Systematic versus unsystematic risks PSources of funds for multinational operations PThe international evidence Butler / Multinational Finance4e (2008) John Wiley & Sons, Inc. 15-6 Capital structurerefers to the proportion of long-term debtand equitycapital and the particular forms of capital chosen to finance the assets of the firm *Note that: -Financial structurerefers to the structure of all (short and long-term) financial liabilities -Capital structurerefers more narrowly to the structure of long-term (debt and equity) capital. The value of the firm is the present value of expected future cash flows discounted at the firms cost of capital. V = tE[CFt] / (1+i)t Financial structure is important if it affects either expected future cash flows or the discount ratein a way that cannot be replicated by individual investors. Capital structure and cost of capital Project valuation and cost of capital Sources of funds for multinational operations The international evidence on capital structure Characteristics of capital structure The MNCs financing opportunities The MNCs cost of capital The MNCs capital structure Butler / Multinational FinanceChapter 15 Multinational capital structure and cost of capital 15-7 Managers must choose The proportions of debt, equity, and hybrid securities Features of the instruments -Debt: fixed or floating rate interest payments, indenture provisions, conversion features, callability, seniority, and maturity -Equity: Voting rights, share classes The location(s) where securities are issued and traded The currency of denomination Location and currency of denomination decisions are influenced by a number of factors, including -The relative demandfor corporate securities in foreign and domestic markets -The relative costsof issuing securities in foreign and domestic locations -Taxconsiderations Characteristics of capital structure The MNCs financing opportunities The MNCs cost of capital The MNCs capital structure Butler / Multinational FinanceChapter 15 Multinational capital structure and cost of capital Capital structure and cost of capital Project valuation and cost of capital Sources of funds for multinational operations The international evidence on capital structure 15-8 Characteristics of capital structure The MNCs financing opportunities The MNC...
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3616_Week 9_CWEE - 15-1 WTO members 15-2 FINS3616...

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