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International Financial Management by Thummuluri Siddaiah

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Chapter 10

Financing Decisions of MNCs

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

  • Highlight the importance of financing decisions of MNCs.

  • Understand the concept and importance of cost of capital.

  • Define capital structure.

  • Discuss various methods of financing foreign subsidiaries or projects.

  • Outline the methods used by MNCs to raise capital.

10.1 Introduction

As discussed in Chapter 9, discount rate plays a crucial role in determining the viability or acceptability of a project. The discount rate is the minimum acceptable rate of return on a project. This minimum acceptable rate is known as the required rate of return (RRR) for the project. Let us consider an example to understand the concept of the required ...

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