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ProduceCom and MakeItCom are two companies of identical size in two different countries, one with a high inflation rate and one with a low inflation
ProduceCom and MakeItCom are two companies of identical size in two different countries, one with a high inflation rate and one with a low inflation rate. ProduceCom is in a country where the inflation rate is 12% and it needs to pay an interest rate of 17% when it borrows. MakeItCom is in a country where the inflation rate is 3%, but it needs to pay a rate of 9% when it borrows. If the time value of money is the same in both economies, which company is being charged a higher risk premium?
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