Question: The ABC Company, a U . S . - based MNC , plans to establish a subsidiary in Spain to manufacture and sell water pumps.
The ABC Company, a USbased MNC plans to establish a subsidiary in Spain to manufacture and sell water pumps. ABC has total assets of $ million, of which $ million is equity financed. The remainder is financed with debt. ABC considers its current capital structure optimal. The construction cost of the facility in Spain is estimated to be million, of which million is to be financed at a belowmarket rate of interest arranged by the Spanish government. The proposed project will increase the borrowing capacity by
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