A firm's most recent annual dividend was 2 per share; its shares ...

[K@]

A firm's most recent annual dividend was 2 per share; its shares sell for 40 in the stock market, and the company expects its dividend to grow at a constant rate of 5 in the foreseeable future.
 
  Using the dividend growth (Gordon) model, what would you estimate its equity cost of capital to be?

Question 2

What are the major risks facing multinational corporations?
 
  What will be an ideal response?

[ndhahbi]

Answer to Question 1

10.25 = (2 )(1.05 )/(40 + .05 )

Answer to Question 2

Sudden and unexpected changes in exchange rates; capital controls; expropriation of property; ownership and human resource restrictions; lack of protection for intellectual property; non-enforcement of contracts and business laws; civil unrest and wars; corruption; discriminatory policies against foreign personnel and businesses (including red tape and special fees and other charges); and sudden changes in governments.