Question Details

Do you think Blades should use the required rate 



1. If Blades expands into Thailand, do you think its cost of capital will be higher or lower than the cost of capital of roller blade manufacturers operating solely in the United States? Substantiate your answer by outlining how Blades’ characteristics distinguish it from domestic roller blade
manufacturers.
2. According to the CAPM, how would Blades’ required rate of return be affected by an expansion
into Thailand? How do you reconcile this result with your answer to question 1? Do you think Blades should use the required rate or return resulting from the CAPM to discount the cash flows of the Thai subsidiary to determine its NPV?




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