--%>
Assignment Help - homework help

Concessionary loan with APV model

State nature of the concessionary loan and explain how it is handled within the APV model?

E

Expert

Verified

Concessionary loan is the loan provided by the governmental body at interest rate below the normal market rate as an enticement for the firm in order to form the capital investment which will benefit the lender economically.  Benefit to MNC is the difference between face value of the concessionary loan changed into the home currency and present value of the similarly changed concessionary loan payments discounted at the MNC’s normal domestic borrowing rate. Loan payments will produce the present value less than the face amount of the concessionary loan when they are discounted at the higher normal rate.  This difference represents a subsidy the host country is wishing to extend to the MNC in case the investment is made.  Benefit to the MNC of concessionary loan is handled in the APV model through the separate term.

   Related Questions in Financial Accounting

  • Q : Cash flows from operating activities A

    A financial analysis tools that measures the need for financing. The formula is the cash-flow from operating activities divided by the cash paid for long-term asset. Cash paid for long-term assets can be found on the statement of cash-flow, in the investing-activities

    		•
  • Q : Workings and nature of the financial

    Assume that you are really interested in investing in the shares of Nokia Corporation of Finland that is a world leader in the wireless communication. However, before making the investment decision, you might like to learn about company. Take a look of the website of

    		•
  • Q : Styles of love Identify and explain the

    Identify and explain the styles of love. Describe each of these styles and give an example of each.

    		•
  • Q : Meso and Macro level theories of

    Identify and elucidate three meso- and/or macro-level theories about deviance.

    		•
  • Q : Case study of a pharmaceutical group in

    The XYZ Group, a supplier of pharmaceutical equipment, systems and services, has its head office in London and primary production facilities in the US. The company also has a successful subsidiary in South Africa, which was established in 1990. XYZ South Africa does n

    		•
  • Q : Meaning of drawing What is the meaning

    What is the meaning of drawing in financial accounting?

    		•
  • Q : Characteristics of Dual currency bonds

    State the characteristics of the Dual currency bonds market instrument.

    		•
  • Q : Abnormal profits Atypically large

      Atypically large proceeds made by an individual or company from commercial activity. An abnormal profit exceeds the normal chance for profit derived from labor costs and capital and considered normal profit. Abnormal profit in a business resides of monopoly and consortium profits.

    		•
  • Q : Role Strain and Role Conflict Define

    Define role strain and role conflict, and provide illustrations of each.

    		•
  • Q : Equity and social exchange theory What

    What is the difference between the equity theory and the social exchange theory ? Define both the theories in brief.

    		•