02 Sep Determine the key reasons why a multinational corporation might decide to borrow in a country such as Brazil, where interest rates are high, rather than in a country like Switzerlan
Please respond to the following:
- Determine the key reasons why a multinational corporation might decide to borrow in a country such as Brazil, where interest rates are high, rather than in a country like Switzerland, where interest rates are low. Provide support for your rationale.
Be sure to respond to at least one of your classmates’ posts.
From professor:
Many of us are risk adverse as we have discussed in previous chapters. Since we are risk adverse, do we carry this over into business transactions? Multinational corporations are in business to make money. That being said they want the biggest bang for their buck. When looking at getting the biggest bang for the buck one would instantly say lower interest rates are better. However, multinational corporations have many factors to consider such as inflation, purchasing power parity, interest rates, and other qualifications. It would make more sense to borrow at higher interest rates from Brazil because when it is time to pay it back, the Purchase Power Parity for its currency is low. It would also make more sense to borrow from Brazil because if the U.S. is going to do business with them as far importing the risk of loss due to exchange rates may decrease. The most important reason to borrow from Brazil than Switzerland would be the fact that Brazil has less terms and conditions. Brazil is trying to build the economy more and by having higher interest rates they can get their money back faster. Switzerland does not need the money. So, they have lower rates to attract borrows but they do not have flexible terms or conditions. It is like the example of taxes in the textbook where Yogi Berri was asked how he wanted his pizza sliced. He responded that he wanted six because he is not hungry enough for eight (Higgins, Koski, & Mitton, 2019). No matter how many slices you make the pizza is still the same size. How can you apply this to getting loans from different loan institutions?
Reference: Higgins, R. C., Koski, J. L., & Mitton, T. (2019). Analysis for financial management (12thFinancial Management (12th ed.). New York, NY: McGraw-Hill Education.
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteEdu. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
Do you need help with this question?
Get assignment help from WriteEdu.com Paper Writing Website and forget about your problems.
WriteEdu provides custom & cheap essay writing 100% original, plagiarism free essays, assignments & dissertations.
With an exceptional team of professional academic experts in a wide range of subjects, we can guarantee you an unrivaled quality of custom-written papers.
Chat with us today! We are always waiting to answer all your questions.