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11Alexandr11 [23.1K]
3 years ago
6

XYZ Company wants to be prepared for the ASEAN free trade area. The company plans to develop its own production and marketing fa

cilities in one or more ASEAN countries. The best choice for XYZ Company is
a joint venture.
b. a licensing agreement.
c. totally owned facilities.
d. exporting.e. sales offices
Business
1 answer:
ruslelena [56]3 years ago
4 0

Answer:

The correct answer is C

Explanation:

Totally owned facilities are those facilities which has its own production as well as the marketing facilities in one or more than one foreign nations. It is an example of the direct investment.

So, the XYZ company need to prepare for the ASEAN free trade area and plans for developing own facilities of marketing as well as production in one or more than one countries of ASEAN.

Therefore, the XYZ company is the company which is totally owned facilities.

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Answer:

Division 1's WACC - Division 2's WACC = 11.752% - 14.6656% = - 1.9136% or Division 1 has the lower cost of capital of 1.9136% in absolute term comparing to Division 2.

Explanation:

Before starting, we need to convert unlevered beta into levered beta:

Levered beta of Division 1: 1.2 x ( 1 + (1-40%) x 0.25) = 1.38

Leverage beta of Division 2: 1.46 x ( 1+ (1-40%) x 0.25) = 1.679

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Second, determine the post-tax cost of debt applied for both Division: 6% x (1-tax rate) = 6% x (1 -40%) = 3.60%

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Finally, compare the WACC between the two Division:

Division 1's WACC - Division 2's WACC = 11.752% - 14.6656% = - 1.9136% or Division 1 has the lower cost of capital of 1.9136% in absolute term comparing to Division 2.

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