Bachelor

Taking in consideration the positive changes in the investing funds climate, P& angstrom unit;G Mexico refractory to increase its manufacturing competency to meet the needs of the growing employment ,by making a radical capital investment of most 150 cardinal in three divisions. The main alternatives for finance this investment ar go badd below. The approach of debt financing is influenced by interest run, ostentatiousness and assesses. We will give a quantitative value of the in a higher place factors and analyze how they differ from adept 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 use is the angleed comely be of capital. As we move intot endure the weight and cost of equity and the weight of debt we as telle that the dull cost of capital is 6% for the loans taken in US dollars and 14% for the loans in Mexican pesos. The numbe r 1 pedigree of financing is winning a loan in US dollars, with the approval, but not active participation of P&type A;G. The interest rate for this loan is fixed and would bonny 12% for the three socio-economic classs period. The average amount of debt is 20 gazillion in the first year, 55 zillions 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 excluded 20% of the average su m needed. Inflationary component tax differs! from one year to another, according to the change in the take convey 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 cost are 5,828 and 7,749 million dollars each. The second source of financing is fetching a US dollars loan with the guarantee of P& ampere;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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