【正文】 1 Solutions for International Corporate Finance Chapter 1 .......................................................................................................................... 2 Chapter 2 .......................................................................................................................... 4 Chapter 3 .......................................................................................................................... 6 Chapter 4 .......................................................................................................................... 8 Chapter 5 ........................................................................................................................ 12 Chapter 6 ........................................................................................................................ 14 Chapter 7 ........................................................................................................................ 16 Chapter 8 ........................................................................................................................ 18 Chapter 9 ........................................................................................................................ 21 Chapter 10 ...................................................................................................................... 23 Chapter 11 ...................................................................................................................... 26 Chapter 12 ...................................................................................................................... 29 2 Chapter 1 5. International Business Methods. Snyder Golf Co., a . firm that sells highquality golf clubs in the ., wants to expand internationally by selling the same golf clubs in Brazil. a. Describe the tradeoffs that are involved for each method (such as exporting, direct foreign investment, etc.) that Snyder could use to achieve its goal. ANSWER: Snyder can export the clubs, but the transportation expenses may be high. If could establish a subsidiary in Brazil to produce and sell the clubs, but this may require a large investment of funds. It could use licensing, in which it specifies to a Brazilian firm how to produce the clubs. In this way, it does not have to establish its own subsidiary there. b. Which method would you remend for this firm? Justify your remendation. ANSWER: If the amount of golf clubs to be sold in Brazil is small, it may decide to export. However, if the expected sales level is high, it may benefit from licensing. If it is confident that the expected sales level will remain high, it may be willing to establish a subsidiary. The wages are lower in Brazil, and the large investment needed to establish a subsidiary may be worthwhile. 8. Comparative Advantage. a. Explain how the theory of parative advantage relates to the need for international business. ANSWER: The theory of parative advantage implies that countries should specialize in production, thereby relying on other countries for some products. Consequently, there is a need for international business. b. Explain how the product cycle theory relates to the growth of an MNC. ANSWER: The product cycle theory suggests that at some point in time, the firm will attempt to capitalize on its perceived advantages in markets other than where it was initially established. 10. Valuation of WalMart’s International Business. In addition to all of its stores in the ., WalMart has 11 stores in Argentina, 24 stores in Brazil, 214 stores in Canada, 29 stores in China, 92 stores in Germany, 15 stores in South Korea, 611 stores in Mexico, and 261 stores in the . Consider the value of WalMart as being posed of two parts, a . part (due to business in the .) and a . part (due to business in other countries). Explain how to determine the present value (in dollars) of the . part assuming that you had access to all the details of WalMart businesses outside the . ANSWER: The . part can be measured as the present value of future dollar cash flows resulting from the . businesses. Based on recent earnings data for each store and applying an expected growth rate, you can estimate the remitted earnings that will e from each country in each year in the future. You can convert those cash flows to dollars using a forecasted exchange rate per year. Determine the present value of cash flows of all stores within one country. Then repeat the process for other countries. Then add up all the present values that you estimated to derive a consolidated present value of all . subsidiaries. 3 15. International Joint Venture. AnheuserBusch, the producer of Budweiser and other beers, has recently expanded into Japan by engaging in a joint venture with Kirin Brewery, the largest brewery in Japan. The joint venture enables AnheuserBusch to have its beer distributed through Kirin’s distribution channels in Japan. In addition, it can utilize Kirin’s facilities to produce beer that will be sold locally. In return, AnheuserBusch provides information about the American beer market to Kirin. a. Explain how the joint venture can enable AnheuserBusch to achieve its objective of maximizing shareholder wealth. ANSWER: The joint venture creates a way for AnheuserBusch to distribute Budweiser throughout Japan. It enables AnheuserBusch to perate the Japanese market without requiring a substantial investment in Japan. b. Explain how the joint venture can limit the risk of the international business. ANSWER: The joint venture has limited risk because AnheuserBusch does not need to establish its own distribution work in Japan. Thus, AnheuserBusch may be able to use a smaller investment for the international business, and there is a higher probability that th