How does a US firm evaluate an investment in a Dutch firm, or how does it evaluate an investment in a project it undertakes itself in France? Which risks occur in an international investment setting, and how are these varying risks across different markets addressed? As firms become increasingly multinational in their operations, addressing these questions is critical in evaluating investments that cross the firm’s domestic borders.
This course starts with a discussion of basic investment concepts and general principles of firm and project valuation, with a deep-dive into estimating free cash flows and the international cost of capital. It addresses sources of risk in an international setting, including market risk, currency risk, and political risk. It then seeks to integrate and apply these risks to cross-border investments, adjusting free cash flows and cost of capital by market-specific characteristics and constraints. This course concludes with case studies of practical application and financial modelling of cross-border equity investments.