Question
Prepare your own investment project if assuming that you already have a multinational company, and now you want to broaden your business to one more
Prepare your own investment project if assuming that you already have a multinational company, and now you want to broaden your business to one more country. Meaning that you want to establish a new subsidiary and you need to prepare the capital structure for this project and then evaluate the feasibility of this project. Some basic requirements you need to cover in the project areas the follows:
-Capital structure should include both domestic sources and the host countrys sources. Apply the term of the exchange rate to calculate the total initial investment in the home countrys currency.
-Calculate the appropriate minimum required rate of return for the project.
-Estimate the future cash flows of the project and convert them into appropriate currency to evaluate the project by using some techniques such as NPV, IRR, payback period, and discounted payback period.
-Prepare some different scenarios of exchange rates that affect the cash flows and reevaluate the project.
-Apply the technique of forwarding or future contract to hedge the project.
-Reevaluate the project if we change the financing structure.
-Evaluate the project if all cash flows are blocked in the host country until you sell the subsidiary.
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