Problem: A U.S. company needs to borrow $100 million for a period of seven years. It can issue dollar debt at 7 percent or yen debt at 3 percent.
1) Suppose the company is a multinational firm with sales in the United States and inputs purchased in Japan. How should this affect its financing choice?
2) Suppose the company is a multinational firm with sales in Japan and inputs that are primarily determined in dollars. How should this affect its financing choice?