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China is a manufacturing superpower. Assume that A CFO of an automobile

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Question;China is a manufacturing superpower. Assume that A CFO of an automobile manufacturer is looking to build a $U.S.800 million plant in China.;1. Give logical step-by-step explanation of the theory behind the concept of \"required return\" on proposed capital investments.;Explain how cost of equity, cost of debt, WACC, and allowances for various risk factors are involved in determining the \"required return\" on proposed international capital investments.;2. Discuss each of the main risk factors that should be allowed for in addition to WACC in order to determine the appropriate required return on this capital investment opportunity.;3. Make a reasonable estimate of the required return, starting with a 12% weighted average cost of capital for the U.S. auto manufacturer, and adding reasonable estimated percentages for each of the separate risk elements you can foresee.

 

Paper#50693 | Written in 10-Dec-2015

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