Question 1 Monitoring Country Risk Once a project is accepted, country risk analysis for the foreign country involved is no longer necessary, assuming that no other proposed projects are being evaluated for that country. Do you agree with this statement? Why or why not? Question 2 Incorporating Country Risk in Capital Budgeting How could a country risk assessment be used to adjust a project's required rate of return? How could such an assessment be used instead to adjust a project's estimated cash flows? Question 3 Country Risk Analysis When Jerrik ApS (Danish) considered establishing a subsidiary in Zenland, it performed a country risk analysis to help make the decision. It first retrieved a country risk analysis performed about one year earlier, when it had planned to begin a major exporting business to Zenland firms. Then it updated the analysis by incorporating all current information on the key variables that were used in that analysis, such as Zenland's willingness to accept exports, its existing quotas, and existing tariff laws. Is this country risk analysis adequate? Explain. Question 4 Country Risk Ratings Assauer lid would like to assess the country risk of Glovanskia. Assauer has identified various political and financial risk factors, as shown below. Assauer has assigned an overall rating of 80% to political risk factors and 20% to financial risk factors. Assauer is not willing to accept a country risk rating of less than 4.0 . Should Assauer consider Glovanskia for investment? EMB plc is planning a project in Pakistan under poor and good economic conditions. You have been provided with four different scenarios below. Calculate after-tax eamings of each scenario for EMB plc, indicating the best and worst scenarios. (D) Assignment Support Question 1 Forms of Country Risk List some forms of country risk other than a takeover of a subsidiary by the host government, and briefly elaborate on how each factor can affect the risk to the MNC. Question 2 Diversifying Away Country Risk Why do you think that an MNC's strategy of diversifying projects internationally could achieve low exposure to overall country risk? Question 3 Reducing Country Risk Explain some methods of reducing exposure to existing country risk, while maintaining the same amount of business within a particular country. Question 5. SHP plc is considering an FDI proposal in Nariena and wants to estimate the level of country risk in order to inform its decision. It has decided to use a check-list approach. It considers two forms of political risk to be of equal importance to the decision: blockage of funds, which it scores Nariena at 2.5, and bureaucracy, which it scores the country at 4 ( 5 representing lowest risk and 1 highest risk). It has also identified two financial risks that are of importance to the FDI: exchange rate risk, which it scores the country at 3.5 , and industry growth, which it scores the country at 2.5. Exchange rate risk is seen as twice as important as industry growth. If SHP plc gives equal importance to political and financial risk, what is Nariena's overall country risk score? ABCDE3.063.133.223.343.50