This is an 8 mark question. As the Chief Executive Officer (CEO) of a multinational firm in the US, you are considering opening a new factory in India, which uses the Rupee as its currency. You estimate that the initial investment during the first year will be $10 million. (a) The Chief Financial Officer (CFO) is telling you that it is reasonable in this case to believe that the international capital markets are integrated. If the CFO is right, explain whether the Rupee is preferable to the US dollar when you make your capital budgeting decision. (2 marks) (b) Suppose your firm is well known in the US, but not well known in India, and you plan to raise capital in the US to support this project. Explain whether the value of this project will be higher or lower if you raise capital in India. (3 marks) (c) Before you make your investment decision, the Government of India unexpectedly announces a new policy, which requires that foreign investors who plan to invest higher than $5 million in a year are subject to government screening. Explain whether you will be more or less confident about opening the new factory in India, given the new policy in place. (3 marks) This is an 8 mark question. As the Chief Executive Officer (CEO) of a multinational firm in the US, you are considering opening a new factory in India, which uses the Rupee as its currency. You estimate that the initial investment during the first year will be $10 million. (a) The Chief Financial Officer (CFO) is telling you that it is reasonable in this case to believe that the international capital markets are integrated. If the CFO is right, explain whether the Rupee is preferable to the US dollar when you make your capital budgeting decision. (2 marks) (b) Suppose your firm is well known in the US, but not well known in India, and you plan to raise capital in the US to support this project. Explain whether the value of this project will be higher or lower if you raise capital in India. (3 marks) (c) Before you make your investment decision, the Government of India unexpectedly announces a new policy, which requires that foreign investors who plan to invest higher than $5 million in a year are subject to government screening. Explain whether you will be more or less confident about opening the new factory in India, given the new policy in place