What are the components of the weighted average cost of capital (WACC) and how do they differ for an MNE compared to a purely domestic firm?
What will be an ideal response?
Answer: The WACC considers the proportion or weight of assets financed with debt and the proportion financed with equity. It also looks at the costs of debt and equity financing and the firm's corporate tax rate. The difficulty of such a computation is compounded for an MNE because there are several additional sources of debt financing with different required rates of return and tax rates for an MNE than for a domestic firm. Also, equity may be sourced in several different markets and subject to several different regulations of several different countries. Adding regulatory oversight, multiple sourcing locations, and differing investor expectations may significantly complicate the process of determining an MNE's cost of capital.
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A company with $50,000 in current assets, $25,000 in quick assets, and $30,000 in current liabilities makes a payment of a $1,500 current debt. As a result of this transaction, the current ratio and quick ratio will
a. both decrease. b. increase and decrease, respectively. c. both increase. d. remain the same and decrease, respectively.
What basic rule should be used in creating sales evaluation criteria?
What will be an ideal response?
An experimental study demonstrated that stressful situations and crisis situations can
a. reduce the perceptions that the leader is charismatic b. increase the perceptions that a leader is charismatic c. cause charismatic leaders to “fall apart” because they are more form than substance d. cause followers to reject the charismatic leaders
A contractor is preparing a bid to install swimming pools at a new housing addition. The estimated time to build the first pool is 35 hours
The contractor estimates a 90 percent learning rate; what is the estimated time to install all 30 pools? Refer to the copy of Table I.1 appended to this exam.