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You are the CFO of a major multinational, headquartered in the USA. Your company wants to build an assembly and distribution plant in Peru. The plant is estimated to cost US$20 million. What are the...

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You are the CFO of a major multinational, headquartered in the USA. Your company wants to build an assembly and distribution plant in Peru. The plant is estimated to cost US$20 million. What are the benefits of financing this in the Eurocurrency market? What are the risks of using this structure of finance? How would you mitigate (minimize) those risks?


Answered Same DayDec 04, 2021

Solution

Akash answered on Dec 07 2021
55 Votes
Running Head: INTERNATIONAL ECONOMICS    1
INTERNATIONAL ECONOMICS         2
INTERNATIONAL ECONOMICS
Table of Contents
Expansion to the Eurocu
ency Market    3
Benefits of Financing in the Eurocu
ency Market    3
Risks of Using the Structure of Financing in the Eurocu
ency Market    3
Ways to Mitigating or Minimizing the Identified Risks    4
References    5
Expansion to the Eurocu
ency Market
I am the Chief Financial Officer (CFO) of the renowned technology and computer multinational firm, Dell, which is headquartered in the US. Our company has planned to expand its market by producing an assembly and distribution unit in the European country, Peru, with an estimated expense of US$ 20mn.
Benefits of Financing in the Eurocu
ency Market
Being the CFO, I have analyzed that the Eurocu
ency market is quite beneficial for seeking credits when the finances are low. According to Pilbeam (2018), the establishment of an assembly and distribution unit of a technology based can be an extremely cost-intrinsic venture. This can be even tougher if the market is in some other continent, because the transportation and accessibility of the parts as well as the finished products become more difficult than it would have been in the intercontinental markets.
Therefore,...
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