Document Type

Article

Publication Date

3-2012

Subject: LCSH

Capital costs, Investments, Foreign

Disciplines

Finance and Financial Management

Abstract

The objective of this paper is to describe a valuation decision model for a firm in a multi -country environment. The paper extends the works of Myers, Myers and Pogue and Lev to include individual investment project decisions to the global marketplace. The model integrates the buy or builds decision, the location of production, distribution decision and tax effects into the capital investment decision of the firm. The model shows that a firm's production decision (buy or build), the customer location and tax effects are interdependent. The model to optimize the value of the firm is a function of the interdependencies of the input and financing factors. This will require significant modification of the traditional theories used for the determination of a firm's capital structure and cost of capital. This implies the current methodology used to learn finance needs to be modified. The paper also briefly discusses its implications on government policy for the economy and the firm.

Comments

© 2012 by the authors. Published by American International Journal of Contemporary Research.

Publisher Citation

Rainish, R. & Mensz, P. (2012). Financial Framework for Global Investment and Implications. American International Journal of Contemporary Research. 2 (3), March 2012. http://aijcrnet.com/journals/Vol_2_No_3_March_2012/9.pdf

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