Researching of Multinational Cost of Capital and Capital Structure. How Does the Multinational Corporations Finance by Using a Capital Structure, and Implications of the Capm for an Mnc’s Risk? Relating to the Two
Research on: effects of capital structure and cost of capital in China’s multinational business management
General Outline
1.The goals of the multinational enterprises’ capital structure
2. The affect on cost of equity capital in the multinational business management. (CAPM MODEL, BETA ([pic]).
3. The affect on cost of debt capital in the multinational business management. (It differ from cost of equity capital, cost of debt capital will be impacted by the pros and cons of multinational business management. I. Play the role of pull up the cost of debt capital, or, II. Play the role of cut down.)
4. Research result.
In recent years, more and more multinational enterprises to develop business in China, it will be affect enterprises’ cost of capital and capital structure in many ways. In this project, through the analysis of the goals for multinational enterprises’ capital structure, and set out a problem of the changes between the cost of equity and cost of debt under the condition of multinational business, to concluded multinational enterprises should balance the positive and negative effects in the multinational business management, and set corporate capital structure reasonably.
This project is conduct using CAPM model:
[pic],
where: • [pic]is the expected return on the capital asset • [pic]is the risk-free rate of interest such as interest arising from government bonds • [pic] (the beta) is the sensitivity of the expected excess asset returns to the expected excess market returns, or also [pic], • [pic]is the expected return of the market • [pic]is sometimes known as the market premium or risk premium (the difference between the expected market rate of return and the risk-free rate of return).
To measure the three factors of equity: risk-free rate of return, beta, and expect market return. In the purpose, it can be help to know what effect for cost of equity capital will be bring out in the
General Outline
1.The goals of the multinational enterprises’ capital structure
2. The affect on cost of equity capital in the multinational business management. (CAPM MODEL, BETA ([pic]).
3. The affect on cost of debt capital in the multinational business management. (It differ from cost of equity capital, cost of debt capital will be impacted by the pros and cons of multinational business management. I. Play the role of pull up the cost of debt capital, or, II. Play the role of cut down.)
4. Research result.
In recent years, more and more multinational enterprises to develop business in China, it will be affect enterprises’ cost of capital and capital structure in many ways. In this project, through the analysis of the goals for multinational enterprises’ capital structure, and set out a problem of the changes between the cost of equity and cost of debt under the condition of multinational business, to concluded multinational enterprises should balance the positive and negative effects in the multinational business management, and set corporate capital structure reasonably.
This project is conduct using CAPM model:
[pic],
where: • [pic]is the expected return on the capital asset • [pic]is the risk-free rate of interest such as interest arising from government bonds • [pic] (the beta) is the sensitivity of the expected excess asset returns to the expected excess market returns, or also [pic], • [pic]is the expected return of the market • [pic]is sometimes known as the market premium or risk premium (the difference between the expected market rate of return and the risk-free rate of return).
To measure the three factors of equity: risk-free rate of return, beta, and expect market return. In the purpose, it can be help to know what effect for cost of equity capital will be bring out in the