Company: Motorcycle Protective Gear
Country: Vietnam
Resources
Read/review the following resources for this activity: Lecture Minimum of 3 resources required
Introduction
Continuing your creation of a MNC, consider the decisions that you made in
previous weeks and add to your company using the prompts below.
Activity Instructions
Provide answers to the following MNC components using both information
and concepts from the text as well as outside research to support your
statements and probable MNC success. You might organize your paper using
the headings and statements below to make sure you include all of the
appropriate information.
Assessing Exposure to Country Risk
Describe the financial factors that expose your business to country risk. Describe the political factors that expose your business to country risk.
Capital Structure Decisions Describe the capital structure that you would use to run your business.
Why might the proportion of equity to be used in your business be
limited when the business is first created?
Writing Requirements (APA format) 4-6 pages not including title page or references page 1-inch margins Double spaced 12-point Times New Roman font Title page with topic and name of student References page (minimum of 3 resources) Week 5 Lecture
FIN616 International Financial Management
Lecture Introduction
So far in this course we have reflected upon the risk that is associated with
exchange rates and currencies for MNCs. However, there are many other
types of risk that MNCs must consider and manage that purely domestic
firms are not subjected to. Some additional risk considerations are often
called country risk and include political risk, financial risk, host government
takeovers, etc. These risks are not stagnant and often change over time.
Therefore, international financial managers and MNCs must continue to
consider country risk even after investment to ensure that the investment
return still outweighs the investment risk.
Another major topic discussed in traditional corporate finance courses is the
capital structure and cost of capital. Corporations must implement a capital
structure policy that supports the risk that is associated with the calculated
cost of capital. However, the calculation of the cost of capital is considerably
more difficult as international locations and foreign funds are considered.
During this week we will discuss various methods to calculate the cost of
capital in a MNC situation as well as how the capital structure of the
company can be set using host country characteristics.
