1.) Impact of Exchange Rates on NPV:

a.) Describe in general terms how future appreciation of the euro will likely affect the value (from the parents perspective) of a project established in Germany today by a U.S.-based MNC. Will the sensitivity of the project value be addicted by the percentage of earnings remitted to the parent each year?

b.) Repeat this question, but assume the future depreciation of the euro.

2.) List some forms of political risk other than a takeover of a subsidiary by the hit government, and briefly elaborate on how each factor can affect the risk to the MNC. Identify common financial factors for an MNC to consider when assessing country risk. Briefly elaborate on how each factor can affect the risk to the MNC.