Internet Research Project: # 10 Running Your Own (MNC) Multinational Corporation NOTE:

Internet Research Project: # 10

Running Your Own (MNC) Multinational Corporation

NOTE:  You will use the business, and the country, that you selected in Week 1 as the basis for each week’s Internet Research Assignment throughout the rest of the semester.

Business Choice: Beauty Cosmetic; Facial Skin Care

Foreign Country Choice: South Korea

Assignment Requirements:

1.  Your response must be formatted utilizing the numbers & headers as provided.

2.  A minimum of one website citation is required.  This is to be a website that you used to research this specific chapter material.  This is NOT to be a textbook citation.

APA citations are required:

When using APA format, follow the author-date method of in-text citation. This means that the author’s last name and the year of publication for the source should appear in the text, like, for example, (Jones, 1998). One complete reference for each source should appear in the reference list at the end of the paper.

3.  500 word minimum.   Note:  the required numbers/headers/formatting provided do NOT count towards the word minimum.

4.  Spelling, grammar, and punctuation will be considered.  Your response should NOT be one long, run-on paragraph.

NOTE:  Make sure to APPLY the concepts covered in Chapter 18 to this Research Project assignment.

Requirements: (format your submission as you see below)

Part A.  Put your product and country at the top of your paper.

Long-Term Debt-Denomination Decision

Part B.  If you planned to borrow long-term funds, you could borrow dollars or you could borrow the foreign currency of concern. Using the Internet or other sources of data, compare the U.S. interest rate to the foreign interest rate over the last 8 quarters.

1.  Which interest rate is typically higher?

2.  Explain why you think that is. 

Part C. 

1.  Use your expansion project from last week’s assignment.  Determine how much you would need to borrow to make it happen.  And then estimate the incremental revenue you anticipate to make from that project.

2.  Explain why you might be able to reduce your exposure to exchange rate risk by borrowing long-term funds denominated in the foreign currency of concern.

3.  Create a table similar to Exhibit 18.2 and use section 18-2 as your guide. Use your products countries currency and the U.S. Dollar.  NOTE:  If you are unable to find all of the data points needed online, you are allowed to make assumptions to complete the model.  Each of your assumptions must be stated.

4.  Based upon your analysis above, which currency provides you the highest NPV?

5.  What country would you choose to borrow in?

Accessing Long-Term Interest Rates

Go to www.bloomberg.com and review the yields (rates) of foreign currencies. The long-term interest rates shown here reflect the government cost of borrowing, so an MNC would have to pay a slightly higher interest rate than the rate shown. What is the government’s borrowing rate in your target country? Is the rate higher or lower than the government rate in the U.S.? What rate do you think you would have to pay if you borrowed funds in your target country?