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20
Short-Term Financing
Chapter Objectives
To explain why MNCs consider
foreign financing;
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V l
ER CF E j , t E j , t n !1 j = t 1 k t =1
E (CFj,t ) = expected cash flows in currency j to be received by the U.S. parent at the end of period t E (ERj,t ) = expected exchange rate at which currency j can be converted to dollars at the end of period t k = weighted average cost of capital of the parent
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Chapter Review
Sources of Short-Term Financing
Chapter Review
Determining the Effective Financing Rate Criteria Considered for Foreign Financing
Interest Rate Parity The Forward Rate as a Forecast Exchange Rate Forecasts
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Chapter Review
Financing with a Portfolio of Currencies
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