1 / 20

220 likes | 415 Views

International Capital Structure. …and the Cost of Capital. The WACC. The Weighted Average Cost of Capital (WACC) is the combined cost of debt and equity funding. It is the rate at which cash flows are discounted to calculate their Net Present Value (NPV) .

Download Presentation
## International Capital Structure

**An Image/Link below is provided (as is) to download presentation**
Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.
Content is provided to you AS IS for your information and personal use only.
Download presentation by click this link.
While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.
During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

**International Capital Structure**…and the Cost of Capital**The WACC**• The Weighted Average Cost of Capital (WACC) is the combined cost of debt and equity funding. It is the rate at which cash flows are discounted to calculate their Net Present Value (NPV).**It is possible that the cost of capital can be reduced using**an international capital structure.**The global costs of debt converged after the early 1980s,**when inflation was brought under control.**The global costs of equity converged after the early 1990s,**though Japan remains the cheapest.**Germany and Japan have consistently higher levels of debt**financing that the UK and USA, due in large part to the relationships between banks and corporations.**Global WACCs are converging; but Japanese firms (low debt**and equity costs) and German firms (low debt costs) still have an advantage.**Example of internationalizing and lowering the cost of**capital: Novo Industri (Denmark)**Restrictions on foreign ownership: Selected examples.*** Thailand: Max 49% foreign ownership.**Example of local/foreign price differential: Nestle**Foreign ownership restrictions lifted**How to Determine the Financial Structure of Foreign**Subsidiaries

More Related