International Financial Management 10 Edition: by Jeff Madura
International Financial Management 10 Edition: by Jeff Madura
International Financial Management 10 Edition: by Jeff Madura
10th Edition
by Jeff Madura
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1
Multinational Financial Management:
An Overview
Chapter Objectives
This chapter will:
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Multinational Corporation:
Firms that engage in some form of international business
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Facing Agency Problems
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Management Structure of MNC
1. Centralized
2. Decentralized
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Why Firms Pursue International Business
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Exhibit 1.2 International Product Life Cycles
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
How Firms Engage in International Business
1. International trade
2. Licensing
3. Franchising
4. Joint Ventures
5. Acquisitions of existing operations
6. Establishing new foreign subsidiaries
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Valuation Model for an MNC:
Domestic Model
E CF$,t
n
V t
t 1 1 k
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Valuation Model for an MNC:
International Cash Flows
E CF$,t E CF j ,t E S j ,t
m
j 1
where CFj,t represents the amount of cash flow denominated
in a particular foreign currency j at the end of period t,
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Exhibit 1.3 Cash Flow Diagrams for MNCs
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Uncertainty Surrounding MNC Cash Flows
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