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The ABC Company,a U

Question 17

Multiple Choice

The ABC Company,a U.S.based MNC,plans to establish a subsidiary in Ecuador to manufacture and sell water pumps.ABC has total assets of $80 million,of which $60 million is equity financed.The remainder is financed with debt.ABC considers its current capital structure optimal.The construction cost of the facility in Ecuador is estimated to be ECS 8,500 million,of which ECS 6,500 million is to be financed at a below-market rate of interest arranged by the Ecuador's government.The proposed project will increase the borrowing capacity by:


A) ECS 1,215 million
B) ECS 2,215 million
C) ECS 3,215 million
D) ECS 4,215 million

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