Bachelor

Taking in consideration the positive changes in the enthronization funds climate, P& angstrom unit;G Mexico distinct to increase its manufacturing competency to meet the needs of the growing product line ,by making a radical capital investment of rough 150 cardinal in three divisions. The main alternatives for financial support this investment ar considerd below. The approach of debt financing is influenced by interest run, ostentatiousness and assesses. We will give a numeric value of the in a higher place factors and analyze how they differ from virtuoso financing alternative to another. The alternatives goat be divided into two main groups: loans interpreted in US dollars and loans taken in Mexican pesos. The discount rate apply is the angleed comely equal of capital. As we move intot take in the weight and cost of equity and the weight of debt we as lende that the leaden cost of capital is 6% for the loans taken in US dollars and 14% for the loans in Mexic an pesos. The number 1 pedigree of financing is winning a loan in US dollars, with the approval, but not active participation of P& group A;G. The interest rate for this loan is fixed and would total 12% for the three categorys period. The average amount of debt is 20 gazillion in the first year, 55 one thousand millions in the present moment year and 90 in the third year.

The devaluation effect, is calculated by multiplying the average debt taken with the forecasted devaluation and with 80% (because only 80% of the total sum is needed in Mexican pesos.) From the devaluation effect, each year has been excl uded 20% of the average sum needed. Inflatio! nary component tax differs from one year to another, according to the change in the take place of inflation. For the exact values see table 1. The total cost of this kind of debt is 19,0265 millions US dollar. Total interest expenses are 19,8 million US dollars, while the depreciation cost and inflationary be are 5,828 and 7,749 million dollars each. The second source of financing is taking a US dollars loan with the guarantee of P&G. In this case the interest rates would be 7%...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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