E.g. if the project is damaged in civil war or political violence or the project is taken over by the government of the host country, Engineering Tech will suffer substantial financial loss. Political risk insurance from EFIC can help protect Engineering Tech from financial loss due to certain political events and this ultimately gives greater confidence to ET. e) Medium term export payment insurance: in general, the longer the payment period in project contracts, the higher the risks of non-payment and the greater the pressure on ET’s working capital. Export payments insurance from EFIC can protect ET against the risks of non-payment
Answer | | If new debt is used to refund old debt, the correct discount rate to use in the refunding analysis is the before-tax cost of new debt. | | | The key benefits associated with refunding debt are the reduction in the firm's debt ratio and the creation of more reserve borrowing capacity. | | | The mechanics of finding the NPV of a refunding decision are fairly straightforward. However, the decision of when to refund is not always clear because it requires a forecast of future interest rates. | | | If a firm with a positive NPV refunding project delays refunding and interest rates rise, the firm can still obtain the entire NPV by locking in a low coupon rate when the rates are low, even though it actually refunds the debt
A more difficult and time consuming effort Huffman could take to reduce exchange rate risk is to spin the rate to your advantage (Prinzel, 2013). This means when USD exchange rates are high, Huffman would need to ensure their customers are aware of the benefits they could be receiving in discounts. Relative to Huffman Trucking’s benefit with this approach, they could buy foreign exchanges when rates are low, similarly taking advantage of the same benefits their customers would
Political economy Foreign Direct Investment (FDI) happens while a global business from one country has an ownership position in an organizational division located in another country (Cullen & Parboteeah, 2008). A country’s facility to attract FDI impacts its economic riches significantly; as such investments generate jobs and bring in tax revenues. Ireland’s financial achievement is considered to be highly related to FDI, as resulted by a statement by the Enterprise Strategy Group (Alfaro & McIntyre, 2008). Both employment data and
'International aid brings both benefits and problems for a country trying to develop its economy' with the aid of named examples evaluate this view. (30 marks) International aid can bring many problems to a country in need of development, this is usually through the ill-use, ill-deployment and abuse of International aid by both the donor countries and the recipient countries. However, effective aid brings more benefits to developing countries than problems is the aid is properly allocated to the area most in need and the aid is not ties so that it benefits the donor. International aid can bring problems to a developing country as it can be an obstacle to development and can provide other problems put forward by the political right. Aid can become an obstacle to development because of the tied nature of much aid, which benefits the donor country more than the recipient, in economic terms.
Adding other assumptions to our valuation model, we concluded a firm value of $83.92 million, and 73% of the firm value is $65.17 million. According to the sensitivity analysis, the possible 73% firm value ranged from $54.62 million to $84.36 million. We recommend Brazos to go for this deal based on the following reasons. Comark was a well-managed company with steady increasing cash flows but had limited access to financing sources. Brazos got the chance to provide funding to Comark at a good price.
Assume that as of 1997, the Nigerian Brady Bond spread is 6.8% and that Nigerian country risk is similar to Mozambique's. Then, apply this method to value the combined investment of equity and subordinated debt in the Mozal Project. What is the NPV then? Suppose you want to change the dividend+interest payment flows to the equity and sub debt investors from the project, so that under this required rate of
It is true that corporations and consumers receive the benefits of cheap labor, but to facilitate stability, taxpayers must cover the infrastructural cost. Notwithstanding all the negative ramifications, illegal aliens do raise the general effectiveness of the U.S. economy by adding profitable contributions via taxes and hence diminishes marginal cost for total product production. Though this topic is important, there are more significant topics (i.e. automation in manufacturing or the growth in global trade) that will have more impact on the U.S.
I agree with Allison Tanney in buying bonds. I believe this will increase the money supply and will create a money cycle as the investors will invest their money in bonds and this paid money will help to pay interest for other
A ratio analysis of Wesfarmers shows that it might still have too much debt and could potentially be in a stronger financial position with less debt; however trends show that Wesfarmers are heading in this direction of decreasing debt. Word Count: 1975 The Global Financial Crisis had a profound impact all over the world. Its influence on debt and equity markets had a direct impact on the capital structures of firms. In order to analyse the effect of the GFC on Wesfarmers and whether the company’s capital structure is optimal in the aftermath of the GFC it will be necessary to define how capital structure is measured and the impact that the GFC had on debt and equity market conditions and the industry that Wesfarmers operates in. Eq.