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Political risk is always an issue of doing businesses in a foreign country.A MNC is considering a 6-year project in Israel.When project ends, assets are
Political risk is always an issue of doing businesses in a foreign country.A MNC is considering a 6-year project in Israel.When project ends, assets are planned to be sold for Israel shekel (ILS) 50 million.However, there is a 20% probability the assets are confiscated.The company plans to buy insurance to cover such a loss.Given its WACC of 13%, what will be the maximum premium?Exchange rate remains constant at $/ILS = 0.25.
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