Conceptual questions/ Numerical problems 1. Severe political-risk or expropriation of assets: Suppose your multinational corporation has made an initial investment of $20 million and that generates annual cashflow of $ 5 million forever. If there is a possibility that the foreign government may expropriate your project assets in the third year of the project how will you take this into account in evaluating the foreign project? Give a brief answer using a time-line and a binomial model for severe political risk (you need not do any calculations). (7 points)