Category Archives: INTERNATIONAL FINANCIAL MANAGEMENT

COST OF CAPITAL

COST OF CAPITAL image The computation of the cost of preference share” (kl is Akihito the cost of debt. The stipulate~ coupon rate of dividend on  reference   hares, like the interest on debt, constitutes the basis for the calculation of the cost. of preference shares. However, unlike    payments on debt,  dividends payable on preference shares .are not tax-deductible. Therefore, no adjustment is ·req

COST OF CAPITAL

COST OF CAPITAL The cost of capital for foreign investment projects (like domestic capital budgeting projects) should  be based on the weighted  verge cost of long-term sources of finance. While computing the cost  of capital, cash flows warrant adjustment not only for  corporate taxes but also for foreign exchange  risk, withholding taxes on repatriations made and 50 on. The determination of the  A’CC

Expropriation and Other Political Risk

Expropriation and Other Political Risk Finally expropriation risk merits consideration in foreign investment decisions as investment in a foreign country entails   political  isl. Political risk can range from mild interference to complete  confiscation cf all assets (referred to as outright expropriation).  included in interference are the  laws warranting the employment of ‘nationals at various positi

Impact of Taxes

Impact of Taxes Since cash inflows after taxes are relevant, it is important to know when and  what amount of taxes are payable on foreign  gamins.   hes earnings are subject to tax at more than one ‘stage’ as per the tax laws in vogue in many countries: First of all, the taxes are  vied on  the subsidiary company by the local government of ‘a country where it is located, as per the tax  La

Cash Flows at Subsidiary and Parent Level

Cash Flows at Subsidiary and Parent Level flows of the project 11 the subsidiary level and the level of the parent Finn. The difference arises  primarily due to tax regulations  affecting repatriation to the parent), exchange controls, inflation  as well as interest rates affecting the exchange rate and so on.  he difference between the two sets of cash flows also arises on account of (he fad that the parent c

Accounting for Intangible Benefits

Accounting for Intangible Benefits Besides quantifiable benefit” intangible benefits such as better quality, faster time to market, prompt and less error-prone order  processing and higher ‘:’Customer Satisfaction, and so on as these benefits  hold the potential of having a favorable  on  conductor cash flows, even if they  cannot be measured precisely should also he accounted r Be Sides, ma

MULTINATIONAL CAPITAL BUDGETING DECISIONS

MULTINATIONAL CAPITAL BUDGETING DECISIONS  Difficulties and Importance capital budgeting decisions are beset with a variety of problems that are rarely ounce domestic!  local firms. The reason is Hat  international firms have to deal with issues related  g others, exchange rate risks, expropriation risk, blocked funds: foreign tax  regulations,  risk and differences between basic business risks of foreign and

INTERNATIONAL FINANCIAL MANAGEMENT

INTERNATIONAL FINANCIAL MANAGEMENT INTRODUCTION The objective of this Chapter is to explain international financial management in terms of foreign multinational capital budgeting  decisions, cost of capital, working capital and important sources of  rational finance. The focus is primarily on the   distinguishing special aspects related to the uncial decisions of the multinational corporations (Incs) internat