8. Cost of Equity. A foreign subsidiary does not have an independent cost of capital. However, in...
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8. Cost of Equity. A foreign subsidiary does not have an independent cost of capital. However, in order to esti- mate the discount rate for a comparable host country firm, the analyst should try to calculate a hypothetical cost of capital. As part of this process, the analyst can estimate the subsidiary's proxy cost of equity by using the traditional equation: kk + B(k-k). Define each variable in this equation and explain how the variable might be different for a proxy host country firm compared to the parent MNE.
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Related Book For
Fundamentals Of Multinational Finance
ISBN: 9780321541642
3rd Edition
Authors: Michael H. Moffett, Arthur I. Stonehill, David K. Eiteman
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