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The Cost Of Capital For Foreign Projects

In: GLOBAL CORPORATE FINANCE A Focused Approach

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  • Suk H. Kim

Abstract

In this chapter, we consider four major topics. First, we discuss the weighted average cost of capital and its component costs of capital (the cost of debt and the cost of equity). In addition, this section explains how corporate and country characteristics influence the cost of capital for multinational cases. Second, we analyze a firm’s capital structure, which consists of long-term debt and common equity. In doing so, we explain how an MNC considers corporate and country characteristics when it establishes its capital structure. Third, we describe the relationship between the marginal cost of capital and foreign investment analysis. The marginal cost of capital refers to the cost of additional funds which the firm wishes to raise. Fourth, we compare the cost of capital and the capital structure across countries.

Suggested Citation

  • Suk H. Kim, 2023. "The Cost Of Capital For Foreign Projects," World Scientific Book Chapters, in: GLOBAL CORPORATE FINANCE A Focused Approach, chapter 13, pages 311-324, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811281969_0013
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    More about this item

    Keywords

    Global Finance; International Finance; International Financial Management; International Accounting; International Business; International Business Finance; Foreign Trade; International Economics; Foreign Exchange; International Corporate Finance; Multinational Finance; International Taxation;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • F3 - International Economics - - International Finance
    • F30 - International Economics - - International Finance - - - General
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F - International Economics

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