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2. Now relax the assumption that the expected free cash flows are uncorrelated with the spot exchange rate. Give an example where the cash flows

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2. Now relax the assumption that the expected free cash flows are uncorrelated with the spot exchange rate. Give an example where the cash flows of the foreign project are affected by exchange rate risk, and suggest an approach to address this issue when valuing the project. Add your own assumptions to the information above to provide a simple numerical illustration of capital budgeting with exchange rate risk

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