Question: In recent years, some US-based MNCs (such as Apple) have taken advantage of the very low-interest rates in the U.S. by borrowing large amounts of

In recent years, some US-based MNCs (such as Apple) have taken advantage of the very low-interest rates in the U.S. by borrowing large amounts of dollars to finance their operations. Discuss the advantages and possible disadvantages (if any) due to this type of financing. Moreover, discuss how such a practice affects the cost of capital and/or WACC. Why would a company take out loans in a country with high-interest rates instead of a country with low interest rates?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

In recent years, some U.S.-based MNCs (such as Apple) have taken advantage of the very low interest rates in the U.S. by borrowing large amount of dollars to finance their operations. Write a short...

INTRODUCTION Driving back to Knoxville on Friday afternoon, Morgan finally had some time to think. Shed spent most of the week in Nashville meeting with many of the Tennessee Valley Authoritys (TVA)...

In recent years, some Asian-based MNCs have taken advantage of the very low interest rates in Europe by borrowing large amount of euro to finance their operations. Write a short essay that explains...

5/21/2016 University of Phoenix: Management PRINTED BY: cherylesowell2012@email.phoenix.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without...

The discussion will focus on management decision-making and control in two companies, American corporation Amazon.com, Inc. and Chinese company Alibaba Group Holding Limited. Decision-making and...

THIS QUESTION IS DUE IN EXACTLY 1 HOUR AND 45 MINUTES. I WILL PAY EXTRA 10 DOLLARS IN TIP IF SOMEONE TYPES THE EXACT ANSWER REQUESTED. PLEASE RESPOND TO THE EACH AND EVERY QUESTION IN A TOTAL OF 3-4...

Hello, My chosen company is Regions Financial Corporation USA. I have to study the data for this company from 8th May to 4th August and answer the questions in the attachment. Thank you in advance....

2a: Consider the following loT network topology figure 2.a, students need to design loT based network in packet tracer. (10 Marks) ii. iii. iv. V. Laptop1 vi. Registration Server MEC MCUO Figure 2.a...

In reference to the proof of Proposition 1 (see also proof of Proposition 3), provide the details of the convergence g(v)dv ->g(0) as 0

Coment Atterget in Propeen Yar Ampuer Carrect Anower Yor amoer lop pietialycorect. to lalvege some of the reconds and hen ancertaired the following balures. \ table [ [ , Decomber 7 t . 2 0 2 7 ,...

Sager Company manufactures variations of its product, a technopress, in response to custom orders from its customers. On May 1, the company had no inventories of work in process or finished goods but...