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Instructions
Imagine that you are the CEO of a multinational corporation (some examples are provided below). The company has excess cash on hand and is seeking to invest it. In a 1500-word essay, analyze your options globally and come up with a strategy to put the company’s $500 million idle cash fund to use. Cite a minimum of three external resources to support the content of your analysis. Use the current APA style guide to format your assignment.
Cover the following concepts in your analysis:
1. Risk and return associated with the investment
· Your discussion should focus on the following risks: project-specific risk, industry-specific risk, competitive risk, international risk, and market risk
· Discuss how diversification in an investment helps in reducing the risk associated with the investment
· Use different models like CAPM, APM, etc., to conduct an analysis of risk vs return
2. Valuation methods used to choose the best investment option
· Your discussion should focus on cost approach, market approach and discounted cash flow approach.
· Use examples and comparative analysis to support your discussion
3. A detailed financial plan for the multinational corporation
· Here you will discuss how you will create a detailed financial plan for the selected organization. Make sure to consider various barriers associated with capital flows.
· The multinational financial management process includes cash management, inventory and accounts receivable management, financing and capital expenditures.
· Consider the factors affecting International Portfolio Investment
4. Cost of capital associated with the corporation based on the current capital structure
· In this section include cost of capital computations associated with the selected organization.
· Discuss each component used in the cost of capital formula
· Discuss challenges associated with cost of capital computations
5. Capital budgeting and capital structure decisions
Company Selection
You can choose any one of the following MNC’s or you can select a company of your own choice:
1. Pepsi Co.
2. Tata Consultancy Services
3. Microsoft
4. IBM
5. The Coca-Cola Company
Resources
Recommended resources for your analysis are:
Yahoo! Finance
Chron: T
he Capital Structure for a Multinational Corporation
Harvard Business Review:
A Refresher on Cost of Capital
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Formatting
Title Page
Citation
Outline
