Financing Corporate Expansion
Intensity Games is an MNE based in San Francisco that manufactures a popular line of video game consoles and accessories. Intensity owns manufacturing facilities in China and Russia where the components of the game consoles are manufactured and assembled before being shipped around the world. Intensity also owns numerous subsidiaries that manufacture game cartridges for Intensity game platforms. Intensity managers have determined that the firm needs to expand the Chinese facility to accommodate increased demand. The firm needs to raise several million dollars to finance the expansion. The financial managers of Intensity are discussing the various financing options available to the firm.
-Which of the following most likely supports Intensity raising funds through intracorporate financing to expand its Chinese facility?

Question

Financing Corporate Expansion 
Intensity Games is an MNE based in San Francisco that manufactures a popular line of video game consoles and accessories. Intensity owns manufacturing facilities in China and Russia where the components of the game consoles are manufactured and assembled before being shipped around the world. Intensity also owns numerous subsidiaries that manufacture game cartridges for Intensity game platforms. Intensity managers have determined that the firm needs to expand the Chinese facility to accommodate increased demand. The firm needs to raise several million dollars to finance the expansion. The financial managers of Intensity are discussing the various financing options available to the firm.
-Which of the following most likely supports Intensity raising funds through intracorporate financing to expand its Chinese facility?

Quizplus · Accepted Answer

Intracorporate financing can save a company money on transaction fees and allow it to take advantage of tax-deductible interest payments within the corporate structure, making it a financially efficient option for funding expansion projects.