Topics
Capital budgeting
Cost of capital for foreign or multinational projects
Explain how a firm should determine the required return for a foreign or multinational project.
Explain the effect of integrated and segregated markets on required returns.
Explain the pricing to market phenomenon as it relates to required returns for foreign or multinational projects
Calculate the required return for a multinational project
Funding multinational projects
Describe factors that should be considered in determining the form of business and the manner of funding a foreign or multinational project, and explain how various funding strategies differ.
Cash flow forecasting and capital budgeting analysis
Explain how cash flow forecasting for a multinational firm or foreign project differs from cash flow forecasting for a domestic project.
Include explanation of how cash flow in different currencies should be treated, and the effect of purchasing materials or services from a company or individual that also has an ownership interest in the project.
Required return
Explain how the required return for a foreign project differs from the required return on a domestic project.
Explain how the required return for a foreign project can be determined.
Transactions in a multinational business
Explain how a multinational firm can arrange its operations to increase its value (e.g., through transactions with affiliated firms in different countries)
Be able to explain operational techniques such as cost and revenue shifting, diversification, leading and lagging, re-invoicing, currency choice, payment timing, counter-trade, as they relate to foreign or multinational businesses. Identify advantages and disadvantages of the various techniques.
Explain different methods a firm can use to move funds from one country to another within an affiliated group of companies.
Explain transfer pricing, payment timing and currency choice strategies to reduce a firm's income taxes or to increase a firm's net cash flow. Explain how a company can set prices in transactions with related companies that reflect actual values (and can be upheld if challenged by a country's tax authority).
Explain how a company can reduce costs of inter-affiliate transactions through netting and/or using a re-invoicing center.
Be able to calculate the tax consequences of choice of currency or payment timing for an affiliated company, or for payments to or from an unrelated third party.
Explain what repatriation is and how a firm can deal with repatriation restrictions (blocked funds).
International taxation
How do approaches of different countries to business taxation differ?
What is the general approach of the U.S. to taxation of a business's income from foreign sources?
Describe different types of taxes, identify the party that bears the cost, i.e., for whom is the tax a direct tax, and for whom (if any) is it an indirect tax
Be able to calculate tax consequences for various types of foreign income.