Consider the investment in China from Problem 13.1. Suppose that in any given year, there is a
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Consider the investment in China from Problem 13.1.
Suppose that in any given year, there is a 10 percent chance that the Chinese government will expropriate your assets. If your assets are expropriated in a particular year, then you will not receive that year's or any later year's cash flow from your investment. This risk is diversifiable and hence does not change the discount rate. What is the NPV of this asset in shekels, assuming the international parity conditions hold and the required returns percent and percent are after-tax discount rates?
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Multinational Finance Evaluating The Opportunities Costs And Risks Of Multinational Operations
ISBN: 9781119219682
6th Edition
Authors: Kirt C. Butler
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