Gentry Inc is a mid-sized tech company considering expanding its operations internationally to increase profits by 15-25%. It is deciding whether to expand to China, Japan, and Germany all at once or one country at a time. To finance the expansion, the company can pursue an IPO or issue bonds. Debt financing through bonds reduces profits due to interest payments but does not require giving up ownership, while equity financing through an IPO dilutes ownership but does not require debt repayments. The company must choose the optimal financing strategy to maximize the value of its expansion.

1. READING HEAD: Business International Expansion
0
Business International Expansion
5
Risk Identification
Yomarie Miranda
Rasmussen College
03/08/2019
Introduction
International expansion is an important decision that the
management of an organization will have to make when it
comes to meeting the expansion missions or goals of their
organization. Companies going public for the first time, like
Gentry Inc are at higher risks when it comes to
internationalization as compared to bigger companies. There are
various risks that the company shall face in its international
expansion strategy, which will be of utmost importance for the
directors to discuss. Gentry Inc qualifies to take an initial
public offering as dictated by the regulations of the Securities
Exchange Commission. The company plans to expand to China,

2. Japan and Germany, to increase its profitability by a margin of
15 to 25 percent. However, the company is likely to face
various risks in its endeavors as shown below.
Transaction Risk
The transaction risk I s describes as the risk on the exchange
rate that is associated with a time delay between entering into a
business agreement and settling the agreement. It is most
common in international firms that have to deal with different
currencies. The longer the time before settlement of an
agreement the higher the risk involved (Ekeha, 2009). Gentry
Inc will be based in three different countries if the expansion
strategy goes well. The above means they will be dealing with
three different currencies. The exchange rate market is very
volatile and changes drastically within short periods of time.
Transactions made by the company in one currency will have to
be converted to the base currency. If the currency pair such as
the dollar (USD) and the Japanese Yen fall. It might affect the
company causing a loss due to the transaction risk. The best
way that Gentry Inc can prevent such losses during business
transactions in different countries is through use of hedging
mechanisms such as forward contracts and purchasing options.
Sensitivity analysis- In the above case, we shall use the analysis
to see what effect a fall in currencies would have on the
company. If Gentry Inc is dealing with profits in Germany, it
will have let's say, 1,000,000 Euros. That will result to
1,179,127 USD if the transaction is settled immediately.
However due to a delay in the settlement the USD devaluates
against the Euro, by one dollar, changing back the dollars to
Euros, the company will have fewer Euros than before which is
a loss caused by transaction risk. Based on the rate of
fluctuations the company can be able to calculate its transaction
risks.
Translation Risk
When Gentry Inc goes international, it will denominate some of
its assets, equities, liabilities and incomes in the foreign
currency, such as the Yen, Euro or CYN. The value of these

3. assets will change as a result of changes in the exchange rates
(Li, Zhu & Li, 2016, p. 105-120). It is commonly referred to as
the accounting risk. The risks lead to what is seen as a
financial loss or gain in the balance sheets of the company.
Gentry might, for example, have a property in China worth CYN
1 million, with a current dollar to CYN ration of 1:1, giving an
equal valuation of $ 1 million. If the exchange rate fluctuates
and the ratio becomes 1:2, it means that the asset will be
reported to have a value of 500,000 dollars. On the balance
sheet, it would show a loss of half the value of the property
even though the property is the same one as before.
Gentry Inc in case of such a scenario should use hedging
techniques such as currency swaps and currency futures to deal
with the risk.
Economic Risk
Economic risks are associated with the microeconomic
environment is a country. Multinational enterprises face
economic risks as they invest their portfolios in different
countries. Economic risks evident in different countries include
government regulations, political stability in a country, the
exchange rate as governed by the Central Bank of the country.
Gentry Inc is investing in foreign countries that have different
economic environments compared to its home country. Political
risks will affect the profits and operability of the company in
other countries. For instance, China is a good market but has
political tension where politics is involved in business
practices. If there is political war in a country like Japan, it
might be a disadvantage to Gentry in that its activities will be
hindered (Vahlne & Johanson, 2017).
Governments in different countries also put strict regulations on
foreign firms as they try to protect their infant industries.
Gentry will have to find a way to go round such regulations and
weigh the benefit and risks associated with the different
countries and make the best decision. Volatile exchange rates in
the three different countries will also affect the firm's
profitability (Dlabay and Scott, 2011). Gentry Inc can minimize

4. economic risks through diversification of its portfolios in the
countries.
Sensitivity Analysis
Gentry Inc's financial analysts can use the sensitivity analysis
or the What-If analysis to predict the outcome of certain actions
taken under certain conditions in the three potential countries.
For instance, the company can use the analysis to predict the
effect of transaction risks in the three countries.
The advantage of the above analysis is that it adds credibility to
financial models by testing through a wide range of
possibilities. It also allows flexibility and helps make informed
choices (Hasegawa & Small, 2017).
Scenario Analysis
The financial analysts can use the method describing in detail,
certain scenarios in a given country, associated with a certain
risk. Analyzing major shocks such as market shifts and business
changes is best done using the above analysis.
The advantages of the strategy are that it encourages creativity
and long-term business planning. It also questions business
assumptions and complements strategic planning. The
disadvantage is that the model can be user biased (Chen & Hu,
2017, p. 26-29).
Conclusion
Gentry Inc should consider all the risks involved in going
international before investing in the three countries. It should
also understand each risk and the effect they have on the
profitability of the company. If some of the risks in different
potential countries are uncontrollable, it should find greener
pasture to ensure that its growth objective is attained.
Transaction, translation and economic risks are at times
inevitable but can be mitigated.

5. References
Chen, Y., & Hu, Y. (2017). Set-valued risk statistics with
scenario analysis. Statistics & Probability Letters, 131, 25-37.
doi: 10.1016/j.spl.2017.08.004
Dlabay, L., & Scott, J. (2011). International business. Mason,
OH: South-Western Cengage Learning.
Ekeha, G. (2009). Evaluation of Hedging Techniques as
Instruments to Minimise the Impact of Transaction and
Translation Risks in Global Business Market. SSRN Electronic
Journal. doi: 10.2139/ssrn.1728827
Hasegawa, R., & Small, D. (2017). Sensitivity analysis for
matched pair analysis of binary data: From worst case to
average case analysis. Biometrics, 73(4), 1424-1432. doi:
10.1111/biom.12688
Li, G., Zhu, J., & Li, J. (2016). Understanding bilateral
exchange rate risks. Journal Of International Money And
Finance, 68, 103-129. doi: 10.1016/j.jimonfin.2016.07.008
Vahlne, J. E., & Johanson, J. (2017). The internationalization
process of the firm—a model of knowledge development and
increasing foreign market commitments. In International
Business (pp. 145-154). Routledge. Retrieved from
https://link.springer.com/content/pdf/10.1057/palgrave.jibs.849
0676.pdf
Diversity and Race Worksheet
Provide a 125- to 175-word answer for each of the following
questions:
What is racism? In what ways does racism affect
diversity?Click here to enter text.
Throughout most of U.S. history, in most locations, what race
has been in the majority? What is the common ancestral
background of most members of this group?Click here to enter
text.
What are some of the larger racial minorities in U.S. history?

6. Identify the common ancestral backgrounds of each of these
groups. When did each become a significant or notable minority
group in the U.S.?Click here to enter text.
What are some ways in which laws have been used to enforce
discrimination? Provide examples and identify which racial
group(s) were affected.Click here to enter text.
What are some ways in which laws have been used to reduce
discriminatory practices? Provide examples. Summarize the
effects of these laws.Click here to enter text.
Identify any existing social inequities based on race and
ethnicity. What are the effects of inequities on the group?Click
here to enter text.
Provide a list of the resources you used to complete this
assignment.Click here to enter text.
Diversity and Race Worksheet
Provide
a 125
-
to 175
-
word ans
wer for each of the following questions:
·
What is racism? In what ways does racism affect diversity?
Click here to enter text.
·

7. Throughout most of U.S. history, in most locations, what race
has been in the majority?
What is the
common ancestral background of most members of this group?
Click here to enter text.
·
What are some of the larger racial minorities in U.S. history?
Identify the common ancestral
backgrounds of
each of these groups. When did each become a significant or
notable
minority group
in the U.S.
?
Click here to enter text.
·
What are some ways in which laws have been used to enforce
discrimination? Provide
examples and identify which racial group(s) w
ere affected.
Diversity and Race Worksheet
Provide a 125- to 175-word answer for each of the following
questions:
Click here to enter text.
has been in the majority?

8. What is the common ancestral background of most members of
this group?
Click here to enter text.
Identify the common ancestral
backgrounds of each of these groups. When did each become a
significant or notable
minority group in the U.S.?
Click here to enter text.
discrimination? Provide
examples and identify which racial group(s) were affected.

9. Yomarie Miranda
Module 03 Course Project - Capital Structure
Optimal capital structure is the one that has lowest WACC.
Lower the WACC, lower the discount rate and NPV would be
higher.
There are several methods to find out WACC, namely; Net
Income Approach, Net Operating Income Approach, Tradutional
Approach. Each method has few assumptions.
· In Net income approach, cost of equity (Re) and cost of debt
(Rd) are assumed to be constant.
· In Net Operating Income approach, cost of equity rises to
compensate reduced cost of debt and keeps overall rate
constant.
· In Traditional approach, cost of debt increases gradually due
to which overall cost of capital falls initially. After certain
point of leverage, debt suppliers would raise cost of debt and
shareholders experience threat of debt interest and would expect
higher returns raising cost of equity.
· Since cost of capital falls initially and then starts rising, there
would be a point where overall capital cost would be minimum.
This point would be Optimal capital structure.
I have used Traditional Appoach here:
Assumptions:
· EBIT of $300m each year and 4 scenarios have been
considered with debt-equity ratio of (Scenario 1)1:9, (Scenario

10. 2) 1:4, (Scenario 3) 1:1, (Scenario 4) 9:1.
· Tax rate hasn't been considered.
· Cost of debt and cost of equity have been assumed.
Formulae used:
1) Market value of debt = Interest / Cost of debt
2) Market value of equity = EAT / Cost of equity
3) Value of firm = Market value of debt + Market value of
equity
4) WACC = EBIT / Value of firm
Outcomes of 4 scenarios are mentioned below in table:
Scenario 1
D/E = 1:9
Scenario 2
D/E = 1:4
Scenario 3
D/E =1:1
Scenario 4
D/E = 9:1
Project Cost
50
50
50
50
Sources of Finance:
Equity
45
40
25
5
Debt
5

11. 10
25
45
Capitalization Rate:
Debt (Rd)
10%
11%
12%
13%
Equity (Re)
20%
20%
25%
30%
EBIT
300
300
300
300
Interest (Debt*Rd)
0.5
1.1
3
5.85
EBT
299.5
298.9
297
294.15
Tax
No tax
No tax

12. No tax
No tax
EAT
299.5
298.9
297
294.15
Market Value of debt (Interest/Rd)
5
10
25
45
Market Value of equity (EAT/Re)
1497.5
1494.5
1188
980.5
Value of firm
1502.5
1504.5
1213
1025.5
WACC
0.1996
0.1994
0.2473
0.2925
Traditional Approach (in mil)
WACC (in %) for below scenarios:
Scenario 1: 19.96%
Scenario 2: 19.94%
Scenario 3: 24.73%
Scenario 4: 29.25%
Optimal Capital structure would be Scenario 2 i.e.; Debt/Equity
= 1/4 since WACC is lowest.

13. Yomarie Miranda
Growth and Expansion Strategy
B330/GEB3020 Section 02 Advanced Principles of Financial
Management

14. As per given case Gentry Inc. is a mid-sized tech firm (200
employees and $300 million in revenue) and has been privately
held since the firm’s inception ten years ago. The organization’s
board of directors is keen on expanding the operations globally
to take advantage of a growing market. Based on reports from
the research and development team, the organization can
increase its profitability metrics by 15 to 25% if it expands the
operations to China, Japan, and Germany. Becoming a
multinational organization will not be easy. To finance this
expansion, the board of directors has decided to take the
organization public and issue some bonds to raise an additional
$50 million. The research team has already determined that the
organization meets the financial requirements outlined by the
Securities Exchange Commission. The goal is to maximize the
Initial Public Offering (IPO), and the leadership must
efficiently manage the capital, measure the risk of the
investments, and ensure the financial metrics are robust relative
to similarly sized organizations.
Company is planning to expand their business operation in
China, Japan, and Germany now the challenge here to decide
whether they should go in one shot in these countries or one by
one. Also there is a challenge as for expansion you need fund
and to raise funds company has two options to go for Debt or
raise money from public i.e. Equity.
Normally all firms decide among two major option basis their
requirement, company growth strategy and their internal
policies. However there are some advantages and disadvantages
of these options. Here are those
The two main types of financial investments that a company use
are
1- Bonds it reduces their bottom line due to interest payments
and debt repayments.
2- Stocks it doesn't affect the bottom line directly.
Three types of financing policies are
1- through internal funding

15. Advantages are there is no external funding required which
means no debt repayment burden on the company.
Disadvantages are seriously reduced the company's cash
position and their current ratios.
2- Debt offering
Advantages are no dilution of the ownership of the company.
Disadvantages are regular interest payments which reduces the
bottom line.
3- Stock offering
Advantages are no regular payments to the stock holders.
Disadvantages are dilution of ownership stake in the company.
In order to expand, it's necessary for Gentry Inc. to tap financial
resources. Business owners can utilize a variety of financing
resources, initially broken into two categories, debt and equity.
"Debt" involves borrowing money to be repaid, plus interest,
while "equity" involves raising money by selling interests in the
company.
Essentially you will have to decide whether you want to pay
back a loan or give shareholders stock in your company. The
key question for many businesses is whether to loan the funds
or surrender equity in the company. Below are some of the main
issues to consider helping you make this decision.
Debt financing is when you borrow money from a lender with
the intention of paying them back. The loan is provided at a
cost, in the form of interest on the debt, which acts as an
incentive to the lender to provide the funds in the first place.
Advantages of debt financing
· The lender will have no say in the way you run your company
and does not own any of the assets of or shares in the company.
· You are in control of how the loan money gets spent. There
are sometimes restrictions but generally, what you are using the
financing for is up to you.
· Once the loan repayments are completed, the business
relationship ends.
· You have to pay the lender back the loan amount plus interest;
but they will have no direct claim on future profits of the

16. business.
Disadvantages of debt financing
· The debt must be repaid in full with interest within a fixed
amount of time.
· The larger a company's debt, the more risky the company is
considered by other lenders and investors. This may limit the
ability of the company to raise capital by equity financing in the
future.
· Cash flow is required for both the repayment of the loan
amount and interest payments and must be budgeted for.
Equity Financing in return for capital investment, the investor
would receive a percentage of ownership of your company by
the transfer of shares.
Advantages of equity financing
· If your business fails, you are not required to pay back
investments.
· Investors may have knowledge, experience and connections to
help you expand your business, adding more credibility and
building stronger relationships.
· You will not have to use income to pay accrued interest and
complete loan repayments as with debt financing. This means
you have got more cash available to grow your business.
Disadvantages of equity financing
· You may lose a degree of control of your company as the
investor will acquire shares in the business and be entitled to a
percentage of the profits where dividends are declared.
· Decisions may have to be discussed with and approved by the
investors, which again, limits the control you have over your
business.
· Finding the right investor can take time. The process for debt
financing is generally much quicker.
There are many factors to consider when making this decision
and which option suits you best will depend on your company’s
credit standing, business plan and financial capital, among
others things. Many businesses even use a combination of both
types of financing utilising each to its best advantage. Again for

17. expansion If we talk about it is completely depend on company
research of market their growth strategy which will derive to go
in one go or partly.
Running Header: COURSE PROJECT MODULE 01 1
Module 01 Course Project- Client Engagement Outline 2
Client Engagement Outline – Gentry, Inc.
Rasmussen College
Yomarie Miranda
Advanced Principles of Financial
Management course.
Client Engagement Outline
I am an outside consultant to Gentry Inc. and have been hired
to help the company with the IPO on the primary market. As
stated in the case description, Gentry Inc. wants to go in the
global market. As we all know this action can potentially help
them increase their profit 15-25 %. Therefore, I assume, that
this case needs to be presented to the Security exchange Board
to get approval to raise funds from the Public.
The History of Gentry Inc. -
Gentry Inc. is a mid-sized tech firm (200 employees and $300

18. million in revenue) and has been privately held since the firm’s
inception ten years ago. The organization’s board of directors is
keen on expanding the operations globally to take advantage of
a growing market.
Background:
Gentry Inc. is a tech company that has been in business for 10
years and has been very successful among mid-size IT firms
through out the years. The reason why a product or platform is
so good is because their emphasis is on their users, not the
product itself. This means fulfilling a need or problem users
never realized was a problem to begin with, until they provide a
solution that transcends current product offerings. Mergers and
acquisitions (M&A) are transactions in which the ownership of
companies, other business organizations, or their operating units
are transferred or combined. As an aspect of strategic
management, M&A can allow enterprises to grow, shrink, and
change the nature of their business or competitive position.
M&A strategies can help companies gain a competitive edge in
growing areas like cloud, cognitive computing, and data
analytics. Gentry Inc. is looking for expansion in global market
and work on R&D.
Location:
The company is looking to expand apart from their current
location of operations towards China, Japan and Germany.
These locations can potentially help Gentry Inc. grow their
customer base as well.
Customer:
Technical insights are different in market research, marketing
research only tells you what already exists. It does not give you
insight to user behavior or how to do something new. In fact,
marketing research narrows down your scope to thinking about
the future, making you focus on solving existing problems
rather than not telling you how to solve problems, which users

19. think don’t exist. Technology can serve virtually any
combination of demographic, psychographic, geographic and
behavioristic characteristics in the consumer market. The
possibilities are endless here, as each conceivable target market
in the consumer segment has at least one unique need that
technology can serve.
Consider cash-strapped college students, for example.
Independent record labels and film studios utilizing online
distribution models can target this group with free
entertainment products. Family-focused shoppers can be served
with a range of communications and home entertainment
technologies, as another example. The Generations also belongs
to technology expansion. Companies all over the world are
focusing on Cloud computing, artificial intelligence, etc. In
such scenarios when companies are looking to go global, global
market can help them grow rapidly and also get a good customer
base. Gentry Inc. is already having a good customer base, which
is helping us make annual revenue of $300 million.
Growth Strategy:
Becoming a multinational organization will not be easy. To
finance this expansion, the board of directors has decided to
take the organization public and issue some bonds to raise an
additional $50 million. The research team has already
determined that the organization meets the financial
requirements outlined by the Securities Exchange Commission.
The goal is to maximize the Initial Public Offering (IPO), and
the leadership must efficiently manage the capital, measure the
risk of the investments, and ensure the financial metrics are
robust relative to similarly sized organizations. This means a
future for the IT industry, which can help them get new set of
customer’s/Target market and consistency for longer periods of
time.

20. References
Eaton, T. (2017, June 1). What makes Top Tech Companies
Successful? Retrieved from https://medium.muz.li/what-makes-
top-tech-companies-successful-8c48762f6fd0
Ingram, D. (n.d.). What Target Market Does Technology Have?
Retrieved from http://smallbusiness.chron.com/target-market-
technology-have-13818.html
M&A Strategy & Capability. (n.d.). Retrieved from
http://www.bain.com/consulting-services/mergers-and-
acquisitions/mergers-acquisitions-strategy-capability.aspx
Titman, S. (n.d.). Financial Management [Book]. Retrieved
from
https://ambassadored.vitalsource.com/#/books/9780134418001/c
fi/6/38!/4/2/2/2/[email protected]:69.8