Which of the Following Is Probably the Best Method of Incorporating

question 32

Multiple Choice

Which of the following is probably the best method of incorporating country risk into a capital budgeting analysis?

• A) adjusting the discount rate upward
• B) adjusting the input variables to estimate the sensitivity of the project's NPV
• C) adjusting the political risk rating to obtain a more favorable NPV
• D) Country risk should be ignored in capital budgeting, since it is a subjective analysis.

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