Foreign Subsidiary Investment Plan Case: Multinational Capital Budgeting China & Australia
Foreign Subsidiary Investment Plan
Case: Multinational Capital Budgeting
China & Australia
Hypothetical Incorporated
MBA AF 626 Fall 2011
International Financial Management
Professor XX
XX
XX
XX
XX
Table of Contents PART I – Analysis: Australia vs. China A. Country Analysis 1. Economic Environment 3 2. Social Environment 10 3. Political Environment 12 B. Industry Analysis 1. Aluminum Industry in Australia 17 2. Airline Industry in China 18
PART II-Capital Budget Analysis 1. Weighted Average Cost of Capital 19 2. Net Present Value 20 3. Scenario Analysis 21 PART III – Conclusion: Investment Decision 23 References 24 Appendixes 26
PART I – Analysis: Australia vs. China A. Country Analysis I. Economic Environment
Australia
Australia is a market oriented financial system which includes the world’s 13th largest economy and the 9th highest per capita Gross Domestic Product (GDP), with almost two consecutive decades of growth and the unemployment rate falling to a generational low. As a result of nearly three decades of structural and policy reforms, Australian’s economy has proven to be a competitive player in the increasingly integrated global markets. In terms of country risk, Australia’s favorable attitude towards private enterprise and its well-protected property rights incent growth and propagate stability conveying comfort to international investors that its government will not take actions that adversely affect the value of companies operating there such as expropriation.
Australia 's economy is dominated by its services sector; yet, it is the agricultural and mining sectors that account for the bulk of Australia 's exports. Australia 's comparative advantage in the export of primary products is a reflection of the natural wealth of the
Case: Multinational Capital Budgeting
China & Australia
Hypothetical Incorporated
MBA AF 626 Fall 2011
International Financial Management
Professor XX
XX
XX
XX
XX
Table of Contents PART I – Analysis: Australia vs. China A. Country Analysis 1. Economic Environment 3 2. Social Environment 10 3. Political Environment 12 B. Industry Analysis 1. Aluminum Industry in Australia 17 2. Airline Industry in China 18
PART II-Capital Budget Analysis 1. Weighted Average Cost of Capital 19 2. Net Present Value 20 3. Scenario Analysis 21 PART III – Conclusion: Investment Decision 23 References 24 Appendixes 26
PART I – Analysis: Australia vs. China A. Country Analysis I. Economic Environment
Australia
Australia is a market oriented financial system which includes the world’s 13th largest economy and the 9th highest per capita Gross Domestic Product (GDP), with almost two consecutive decades of growth and the unemployment rate falling to a generational low. As a result of nearly three decades of structural and policy reforms, Australian’s economy has proven to be a competitive player in the increasingly integrated global markets. In terms of country risk, Australia’s favorable attitude towards private enterprise and its well-protected property rights incent growth and propagate stability conveying comfort to international investors that its government will not take actions that adversely affect the value of companies operating there such as expropriation.
Australia 's economy is dominated by its services sector; yet, it is the agricultural and mining sectors that account for the bulk of Australia 's exports. Australia 's comparative advantage in the export of primary products is a reflection of the natural wealth of the
References: TradingEconomics. (2011, 11 26). Australia Government Budget. Retrieved 11 26, 2011, from TradingEconomic <http://www.tradingeconomics.com/australia/government-budget> TradingEconomics Mundi, I. (2011, 10 4). Australia Inflation rate (consumer prices). Retrieved 11 24, 2011, from Index Mundi <http://www.indexmundi.com/australia/inflation_rate_(consumer_prices).html> C