Questions and Answers of Foundations Of Multinational Financial Management

What are the principal cash inflows associated with the IDC U.K. project?
One of the purposes of Eximbank is to absorb credit risks on export sales that the private sector will not accept. Comment on this purpose.
Comment on the following statement: “Eximbank does not compete with private financial institutions. It offers assistance only in cases in which the export credit transaction would not take place
Apex Supplies borrows FF 1 million at 12%, payable in one year. If Apex is required to maintain a compensating balance of 20%, what is the effective percentage cost of its loan (in FF)?
These questions relate to the Foreign Credit Insurance Association.a. Describe the different risks covered by FCIA. Why does the FCIA require coinsurance?b. What factors affect the insurance premium
Suppose a U.S. parent owes $5 million to its English affiliate. The timing of this payment can be changed by up to 90 days in either direction. Assume the following effective annualized after tax
Low-cost export financing is often a bad sign. Explain.
The Olivera Corp., a manufacturer of olive oil products, needs to acquire Lit 100 million today to expand a pimento stuffing facility. Banca di Roma has offered them a choice of an 11% loan payable
In what aspect of an MNC’s multinational financial system does its value reside?
What is countertrade? Why is it termed a sophisticated form of barter?
Suppose that covered after tax lending and borrowing rates for three units of Eastman Kodak located in the U.S., France, and Germany are:a. What is Kodak’s optimal leading and lagging
How does the internal financial transfer system add value to the multinational firm?
Under what circumstances is leading and lagging likely to be of most value?
Suppose that in the section titled Dividends, International Products has $500,000 in excess foreign tax credits available. How will this situation affect its dividend remittance decision?
Suppose affiliate A sells 10,000 chips monthly to affiliate B at a unit price of $15. Affiliate A’s tax rate is 45%, and affiliate B’s tax rate is 55%. In addition, affiliate B must pay an ad
What are the principal advantages of investing in foreign affiliates in the form of debt instead of equity?
It has been found that U.S.-controlled companies, on the average, earned higher returns on their assets as compared to their foreign-controlled counterparts. A number of American politicians have
Suppose GM France sells goods worth $2 million monthly to GM Denmark on 60 day credit terms. A switch in credit terms to 90 days will involve a one time shift of how much money between the two
Merck Mexicana SA, the wholly owned affiliate of the U.S. pharmaceutical firm, is considering alternative financing packages for its increased working capital needs resulting from growing market

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