Financing Tradeoffs
Response to the following problem:
Pullman, Inc., a U.S. ?rm, has been highly pro?table, but prefers not to pay out higher dividends because its shareholders want the funds to be reinvested. It plans for large growth in several less developed countries. Pullman would like to ?nance the growth with local debt in the host countries of concern to reduce its exposure to country risk. Explain the dilemma faced by Pullman, and offer possible solutions.