One component of the gains from international diversification is the lower cost of capital. If the NCF(d) is $25 and the required rate of return is 10%, the value of the domestic investment is less than $200. Other things being equal, if the value of NCF(mn) is greater than the NCF(d), the multinational firm will be greater than the value of a strictly domestic firm. Other things being equal, if the required rate of return for multinational investment is greater than the required rate of return for domestic investment, the multinational firm will be greater than the value of a strictly domestic firm. The gains from international diversification are positive