Question
I estimating an appropriate discount rate for a foreign project you have determined that the project poses considerable country risk.Further, your analysis suggests that this
I estimating an appropriate discount rate for a foreign project you have determined that the project poses considerable country risk.Further, your analysis suggests that this risk is fully diversifiable.In analyzing this potential investment, your best approach to dealing with this country risk would be to:
A) Adjust the project's expected cash flows across different scenarios and compute and expected NPV
B) Add a country risk premium to the project's cost of equity
C)
Adjust both the cost of equity with a country risk premium, and adjust the project cash flows across different scenarios to compute and expected NPV
D)
Recommend that your firm completely avoid this investment
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