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Cost to repatriate money ~ 35% Cost to borrow money < 1%

No brainer

To be precise, the cost of repatriation is min[(35% - foreign tax),0].

min? wouldn't the min almost always be 0?

Ah, you are right, it's 'max'!

A lot of cash rich multi-national companies have this foreign cash "problem." They earn it overseas and can't bring it back without paying U.S. tax on it, so they leave it there. On page 31 of Google's 10-Q it says that $17 billion of its $37 billion cash hoard at March 31, 2011 was held outside the U.S. and was unlikely to be repatriated to the U.S. for tax reasons. Of course that still leaves them with $20 billion in the U.S., plus whatever they've earned in the U.S. since March 31, 2011, but I guess borrowing an extra $3 billion at ultra-low US Treasury-like rates is an historically cheap way to top up the tank.

Good point.

The issue also kicks off a dialogue with debt investors, which should give Google information about what revenue streams are regarded as most stable. That could be useful info if at some later date they want to spin off some of their activities.