Abstract
This paper presents a methodology for determining the true costs of alternative sources of financing for the multinational corporation when the risk of exchange rate changes is present and different tax rates and regulations are in effect. The cost formulas presented can then be used to calculate the cheapest financing source given the expected exchange rate changes.
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*Alan C. Shapiro is an Assistant Professor at The Wharton School of the University of Pennsylvania. He received his Ph.D. in Economics from Carnegie-Mellon University. He has previously published articles on exchange risk management in the Journal of Financial and Quantitative Analysis and Management Science.
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Shapiro, A. Evaluating Financing Costs for Multinational Subsidiaries. J Int Bus Stud 6, 25–32 (1975). https://doi.org/10.1057/palgrave.jibs.8490775
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DOI: https://doi.org/10.1057/palgrave.jibs.8490775