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21 Jun 2019

List and briefly describe the five cost-related motives for undertaking Direct Foreign Investment.

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Beverley Smith
Beverley SmithLv2
24 Jun 2019
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Related questions

Differentiate "portfolio investment" and "direct foreign investment (DFI).

What are "revenue-related motives" to direct foreign investment?

What are "cost-related motives" to DFI?

Emerging markets attract inward foreign direct investment (FDI)due to their low cost advantages and significant market potential.Recently, we are also seeing an increasing volume of outward FDIfrom emerging markets.

Why are these emerging market firms investing overseas despitetheir home market attractiveness and their lack of internationalexperience?

Please discuss the firmรขย€ย™s motives and viable strategies ofemerging market firms conducting FDI overseas.

23. Husky Inc. is considering a capital expansion project. The initial investment of undertaking this project is $214,500. This expansion project will last for five years. The net operating cash flows from the expansion project at the end of year 1, 2, 3, 4 and 5 are estimated to be $50,850, $69,783, $71,332, $81,236 and $107,750 respectively.

Husky has a capital structure consisting of 60% debt and 40% equity. The after-tax cost of debt is 15% and the cost of equity is 37.50%.

what is the modified internal rate of return if Husky undertakes this project. Assuming that the positive cash inflow from undertaking this project will be reinvested at the weighted average cost of capital.

A. 18.39%
B. 19.20%
C. 20.83%
D. 21.65%

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