[SOLVED]

Three questions: The classical theory that explains why trade takes place across boarders is the “Comparative Advantage Theory”. Assume that there are two goods that exist in the world (food and clothes) and two countries (USA and Japan). If Japan can produce food and clothes more efficiently compared to US, can both countries still benefit from trade? According to your slides, you can do international trade using one of the following options: Licensing, Franchising, Joint Venture, Acquisition of Existing Operation, Establishing New Foreign Subsidiaries. How are these different methods of doing international trade effect your company’s cash flows? Your company’s discount rate? Which methods are relatively more risky? Why? According to discounted cash flow valuation model (DCF), a company’s value is the summation of all future expected cash flows discounted with the appropriate discount rate to present time. What additional factors enter this definition of company valuation when the company is doing business in an international setting (when foreign currency is involved)?