In general, MNCs probably prefer to use _ domestic debt when their foreign
subsidiaries are subject to _ foreign interest rates.
High level of debt favorably affects cost of capital because
Assume a U.S.-based MNC has a Chilean subsidiary that annually remits 30 million
Chilean pesos to the U.S. If the $ _, the NPV of remitted funds would probably _
(assuming cost of capital remains constant).
Baylor Bank believes the New Zealand dollar (N.Z $) will change in its
value over the next 5 days from $0.48 to $0.50. The following annual
interest rates apply:
Lending Rate for U.S.$: 7.10%
Borrowing Rate for U.S.$: 7.50%
Lending Rate for N.Z
Graylon, Inc., based in Washington, exports products to a German firm and will
receive payment of 200,000 in three months. On June 1, the spot rate of the euro
was $1.12, and the 3-month forward rate was $1.10. On June 1, Graylon negotiated a