THE COST OF CAPITAL FOR FOREIGN PROJECTS

Suk H. Kim

Chapter 13 in Global Corporate Finance:A Focused Approach, 2023, pp 311-324 from World Scientific Publishing Co. Pte. Ltd.

Abstract: In this chapter, we consider four major topics. First, we discuss the weighted average cost of capital and its component costs of capital (the cost of debt and the cost of equity). In addition, this section explains how corporate and country characteristics influence the cost of capital for multinational cases. Second, we analyze a firm’s capital structure, which consists of long-term debt and common equity. In doing so, we explain how an MNC considers corporate and country characteristics when it establishes its capital structure. Third, we describe the relationship between the marginal cost of capital and foreign investment analysis. The marginal cost of capital refers to the cost of additional funds which the firm wishes to raise. Fourth, we compare the cost of capital and the capital structure across countries.

Keywords: Global Finance; International Finance; International Financial Management; International Accounting; International Business; International Business Finance; Foreign Trade; International Economics; Foreign Exchange; International Corporate Finance; Multinational Finance; International Taxation (search for similar items in EconPapers)
JEL-codes: F F21 F23 F3 F30 F31 G3 (search for similar items in EconPapers)
Date: 2023
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