Editorial Universo

This case analyzes a direct investment in Brazil by a medium-sized Spanish company. It outlines the quantitative and qualitative reasons behind this decision, the possible future cash flow scenarios, the issues that might arise and how negative cash flow in the subsidiary may affect positive cash flow in the parent company. It takes into account the financial solvency - though not very considerable - of the parent company, which, when presented with the possibility of making an acquisition in Brazil, rises to the occasion. The IRR of the project is calculated, the different sources of financing for a direct foreign investment are studied, and, finally, the financing option chosen is critically analyzed.