Matrix Dot Limited, a US-based MNC, is planning to invest in Bangladesh. As a part of their initial assessment of the overall business environment and suitability of Bangladesh, the company has used Delphi techniques and collected the following information.

Factors	Weight Assigned According to Importance	Rating Assigned by Company to Factor
Political Risk Factors (Overall Factor Lodgings = 50%)
Blockage of fund transfers	10%	4
Host Government Attitude	15%	3
Corruption	50%	5
Bureaucracy	25%	3
Financial Risk Factor (Overall Factor Lodgings = 50%)
Interest rate	30%	5
Inflation rate	10%	4
Exchange rate	20%	4
Industry competition	10%	5
Industry growth	30%	3

Moreover, the company has also collected information regarding its operations. The company wants to invest in Bangladesh for 4 years. Following is the information related to the capital budgeting of Matrix Dot Limited.

• The initial investment is $1 million.
• Price, variable cost, and demand information have been given as follows:

	Year1	Year2	Year3	Year4
Price per unit (BDT)	350	350	400	450
Variable cost per unit (BDT)	200	200	200	200
Demand in Bangladesh (Units)	600000	600000	1000000	1000000

• The yearly expense of leasing office space is BDT 5.0 million per year and the yearly other overhead expense is BDT 5.0 million.
• Annual Depreciation will be at BDT 15.00 million.
• Income tax by Bangladesh government is 30% and withholding tax is 10% while USA government will give a tax credit to Matrix during projects life. There is a blockage of 3 years on remittance.
• The entire amount of salvage value has been realized without any capital gain or loss.
• The spot rate at time zero is $0.0163 per BDT. However, projected weak economic recovery in the USA will result in 4% inflation in the USA and strong economic growth in Bangladesh will result in 5% inflation for next year. The exchange rate will hold at the inflation-adjusted level.
• The cost of capital is 12%.
• The company only invests in those countries which have a country risk score of at least 3.6. However, if the country risk rating becomes above 4, then the company reduced the discount rate. Under such circumstances, the rate cost of capital reduces by 2%.

Requirements: a. What is the country risk rating for Bangladesh as determined by Matrix? (4 Marks)