--%>
Assignment Help - homework help

Political risk in capital budgeting

How would you include political risk within the capital budgeting process of foreign investment projects?

E

Expert

Verified

One method is to regulate the capital cost upward to reflect the political risk and discount expected future cash flows at the higher rate. Otherwise, one may subtract insurance premium for political risk from expected future cash flows and utilize the usual capital cost that is applied into the domestic capital budgeting.

   Related Questions in Financial Accounting

  • Q : Calculate depreciation expense for the

    On December 31, 20x3, the PPE Company purchased an asset costing $1,000,000. The asset’s useful life is expected to be 10 years with a residual value of $300,000. a. Calculate the depreciation expense for 20x4 using:

  • Q : Vernon’s product life-cycle theory of

    Discuss the Vernon’s product life-cycle theory of the FDI. Specify the strength and weakness of theory?

    		•
  • Q : Parallel and back-to-back loan

    Distinguish between the parallel loan and the back-to-back loan.

    		•
  • Q : Market participants in foreign exchange

    Who are market participants within the foreign exchange market?

    		•
  • Q : Project Advantages-disadvantages of

    Advantages-disadvantages of internal rate of return method

    		•
  • Q : Wind turbine I have started to design a

    I have started to design a wind turbine but I am stuck now. I would like you to have a look to my design and tell me what do I have to do.

    		•
  • Q : Matlab Applications in Image and Video

    Image and video processing is most difficult topic in electrical and electronics field. This topic becomes trickier if you are taking use of Matlab in this. Student faces a lot of problem in image and video processing theories. If you are messed up with same difficulties

    		•
  • Q : Essay topics related to Religion I have

    I have some problem related to Essay topics which are related to Religion which are illustrated below: Topic A:What are the qualities of the ‘perfect&rsq

    		•
  • Q : Double taxation Specify some of the

    Specify some of the methods taxing authorities utilize to remove or diminish evil of double taxation?

    		•
  • Q : PPE The following information is taken

    The following information is taken from the financial statements of an entity: 20x4 20x3 Property, plant and equipment $4,600,000 $4,200,000 Accumulated depreciation (1,800,000) (1,350,000) Depreciation expense 560,000 Gain on disposal of PPE 65,000 The asset disposed of had a cost

    		•