Determine the key reasons why a multinational corporation might decide to borrow in a country such as Brazil, where interest rates

Please respond to the following:

  • Determine the key reasons why a multinational corporation might decide to borrow in a country such as Brazil, where interest rates are high, rather than in a country like Switzerland, where interest rates are low. Provide support for your rationale.

Be sure to respond to at least one of your classmates’ posts.

From professor:

Many of us are risk adverse as we have discussed in previous chapters. Since we are risk adverse, do we carry this over into business transactions? Multinational corporations are in business to make money. That being said they want the biggest bang for their buck. When looking at getting the biggest bang for the buck one would instantly say lower interest rates are better. However, multinational corporations have many factors to consider such as inflation, purchasing power parity, interest rates, and other qualifications. It would make more sense to borrow at higher interest rates from Brazil because when it is time to pay it back, the Purchase Power Parity for its currency is low.  It would also make more sense to borrow from Brazil because if the U.S. is going to do business with them as far importing the risk of loss due to exchange rates may decrease. The most important reason to borrow from Brazil than Switzerland would be the fact that Brazil has less terms and conditions. Brazil is trying to build the economy more and by having higher interest rates they can get their money back faster. Switzerland does not need the money. So, they have lower rates to attract borrows but they do not have flexible terms or conditions. It is like the example of taxes in the textbook where Yogi Berri was asked how he wanted his pizza sliced. He responded that he wanted six because he is not hungry enough for eight (Higgins, Koski, & Mitton, 2019). No matter how many slices you make the pizza is still the same size. How can you apply this to getting loans from different loan institutions?

Reference:       Higgins, R. C., Koski, J. L., & Mitton, T. (2019). Analysis for financial management (12thFinancial Management (12th ed.). New York, NY: McGraw-Hill Education. 

    Calculate the price of your order

    550 words
    We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
    Total price:
    The price is based on these factors:
    Academic level
    Number of pages
    Basic features
    • Free title page and bibliography
    • Unlimited revisions
    • Plagiarism-free guarantee
    • Money-back guarantee
    • 24/7 support
    On-demand options
    • Writer’s samples
    • Part-by-part delivery
    • Overnight delivery
    • Copies of used sources
    • Expert Proofreading
    Paper format
    • 275 words per page
    • 12 pt Arial/Times New Roman
    • Double line spacing
    • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

    Our guarantees

    Delivering a high-quality product at a reasonable price is not enough anymore.
    That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

    Money-back guarantee

    You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

    Read more

    Zero-plagiarism guarantee

    Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

    Read more

    Free-revision policy

    Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

    Read more

    Privacy policy

    Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

    Read more

    Fair-cooperation guarantee

    By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

    Read more
    Open chat
    Hello. Can we help you?