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Essay / Research Paper Abstract
A 4 page paper. Acme plans to construct a Greenfield facility in Germany. This paper provides data regarding FDI in Germany. It then discusses options for financing the project. Statistical data included. Bibliography lists 8 sources.
Page Count:
4 pages (~225 words per page)
File: ME12_PG692318.doc
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Unformatted sample text from the term paper:
Germany ranks sixth in the world in terms of foreign direct investment (Germany Trade & Invest, 2010). The country encourages Greenfield projects and welcomed almost 700 of these projects in
2009, many of which were in the manufacturing sector (Germany Trade & Invest, 2010). Acme is considering options for financing this project that has a projected cost of $500 million.
As a multibillion corporation, it is not unreasonable to think that Acme has more than $100 million in cash reserves. By investing this up front, the company will save millions
of dollar in interest payments. The question that must be answered is where to get the rest of the money. The most logical choice is bank loans. Many companies
choose to finance its foreign operations in the host country but it is crucial to compare interest rates. Two of the most common international sources for financing projects is the
Eurocurrency market and the Eurobond market (World Academy Online, 2011). The Eurocurrency market is less than one year but it is longer when financing in the currency country. The Eurobond
market is longer-term but can not be for the currency of that country (World Academy Online, 2011). Other sources for Acme would include joint ventures, short-term bank loans and long-term
bank loans from a United States bank or a German or Euro Bank. Corporate bonds are bonds issued by the company and give the holder a specified payment at
some time in the future (Investor Words, 2011). For example, a corporation could offer bonds at a $100 cost that will be worth $1,000 in 20 years. Commercial paper is
another option. These are typically issued through a dealer or broker (Investor Words, 2011). Commercial paper could reflect a discount on the face amount or it could offer interest on
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