fin630_ip4.

Apr 28th, 2015
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Having previously identified the location of its Greenfield investment, Acme, a multi-billion public MNE that is incorporated in the U.S., must next obtain external financing for its proposed overseas production facility. It has been estimated that the acquisition will cost $500M and all funds will be secured in the U.S. Your job is to explain to this committee some of the financial aspects of this acquisition. Deliverable: At the next steering committee meeting, you will provide a detailed presentation of the characteristics of the various external financing alternatives, including the advantages and disadvantages of each. Your report should conclude with a recommendation of which alternative (or combination of alternatives) should be used to finance the overseas investment.

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FIN630-IP4NameClassDateProfessorFIN630-IP4 Once the location of the Greenfield investment has been determined the next step in the process is to obtain external financing. Sourcing money is an essential aspect of developing the overseas production facility. The acquisition of the Greenfield property will require an investment of 500M dollars and the Acme Corporation will require external financing from US sources. The external financing options that can be employed include borrowing money that will be repaid with interests over time or by selling a stake in the business in return for the external financing. The Acme Corporation can finance their growth by using the retained earnings of the business or by raising external finance (Davis, 2004). The variety of external financing means that can be employed by Acme Corporation in order to finance their 500M Greenfield Project include loan stock, retained earnings, bank borrowing, government sources, and franchising. Loan stock is an external financing method were long-term debt capital is raised by the organization and then interest is paid, usually half yearly at a fixed rate (FAO, 2008). The loan stock interest will paid back at an agreed upon fixed rate. The debenture refers to a process where the issuer can change the interest rates based on the current interest rates of the market. The loan stock acts as security or collateral for the loan that has been given and comes in the form o

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