Professional Documents
Culture Documents
International Finance
International Finance
Chapter Objectives
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1-3
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Financial
Managers
of Parent
Cash
Management
at B
Inventory and
Accounts
Receivable
Management at B
Financing at B
Capital Expenditures
at B
1-7
Financial
Managers
of A
Inventory and
Accounts
Receivable
Management at A
Financing at A
Capital Expenditures
at A
Financial
Managers
of B
Cash
Management
at B
Inventory and
Accounts
Receivable
Management at B
Financing at B
Capital Expenditures
at B
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1-9
stock options
investor monitoring
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1 - 13
Firm exports
product to
accommodate
foreign demand
or
b. Firms
foreign
business
declines as its
competitive
advantages are
eliminated
Firm
establishes
foreign
subsidiary
to establish
presence in
foreign
country
and
possibly to
reduce
costs
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International
Business Methods
International trade involves exporting and/or
importing.
Licensing allows a firm to provide its
International
Business Methods
Firms may also penetrate foreign markets
International
Business Methods
Firms can also penetrate foreign markets
International Opportunities
Investment opportunities
Financing opportunities
International Opportunities
Opportunities in Europe
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International Opportunities
Opportunities in Latin America
Opportunities in Asia
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Value =
t =1
E CF$, t
1 k
E (CF$,t )
=
expected cash
flows to be received at the end of
period t
n
=
the number of periods into
the future in which cash flows are
received
k
=
the required rate of return
by investors
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E CF E ER
Value =
t =1
j 1
j, t
1 k
j, t
E (CFj,t )
=
expected cash flows
denominated in currency j to be received by the
U.S. parent at the end of period t
E (ERj,t )
=
expected exchange rate at
which currency j can be converted to dollars at
the end of period t
k =
the weighted average cost of capital
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