Question

What a Global Cost is and what it means to have availability of Capital?

What is WACC and why is it an important measure?

What does knowing your company's WACC allow a firm to do?

What are some motives and alternative instruments to source equity globally?

Is there optimal capital structure for multinationals?

Answer 1

Solution 1

The global cost and availability of capital depends on how a firm gains liquidity for its equity and debt securities on international standards rather than domestic conditions. In other words, this means what strategies a firm uses to attract international investors to invest in the business operations and thereby escape the limitations of segmented and illiquid domestic market. While going for international fund raising, firms consider international marginal cost of capital and compare the same across countries.