Questions from Financial Management

Q: Rose, Inc., of Dallas, Texas, needed to infuse

Rose, Inc., of Dallas, Texas, needed to infuse capital into its foreign subsidiaries to support their expansion. As of August 2001, it planned to issue stock in the United States. However, after the S...

Q: If Nike decides to expand further in South America, why might

If Nike decides to expand further in South America, why might its capital structure be affected? Why will its overall cost of capital be affected?

Q: Charleston Corp. is considering establishing a subsidiary in either Germany or

Charleston Corp. is considering establishing a subsidiary in either Germany or the United Kingdom. The subsidiary will be mostly financed with loans from the local banks in the host country chosen. Ch...

Q: Kent Co. is a large U.S. firm with

Kent Co. is a large U.S. firm with no international business. It has two branches in the United States, an eastern branch and a western branch. Each branch currently makes investing or financing decis...

Q: In recent years, several U.S. firms have entered

In recent years, several U.S. firms have entered the market in Mexico. One of the biggest challenges is the cost of capital to finance businesses in Mexico. Mexican interest rates tend to be much high...

Q: The subsidiaries of Forest Co. produce goods in the United States

The subsidiaries of Forest Co. produce goods in the United States, Germany, and Australia and sell those goods in the areas where they are produced. Foreign earnings are periodically remitted to the U...

Q: Wizard, Inc., has a subsidiary in a country where the

Wizard, Inc., has a subsidiary in a country where the government allows only a small amount of earnings to be remitted to the United States each year. Should Wizard finance the subsidiary with debt fi...

Q: Fairfield Corp., a U.S. firm, recently established

Fairfield Corp., a U.S. firm, recently established a subsidiary in a less developed country that consistently experiences an annual inflation rate of 80 percent or more. The country does nothave an es...

Q: Carazona, Inc., is a U.S. firm that

Carazona, Inc., is a U.S. firm that has a large subsidiary in Indonesia. It wants to finance the subsidiary’s operations in Indonesia, but the cost of debt is currently about 30 percent there for firm...

Q: Zylon Co. is a U.S. firm that provides

Zylon Co. is a U.S. firm that provides technology software for the government of Singapore. It will be paid S$7 million at the end of each of the next five years. The entire amount of the payment repr...