Perhaps the most appropriate method for incorporating forms of country risk in a capital budgeting analysis is to estimate how the ____ would be affected by each form of risk.
A) discount rate
B) cash flows
C) opportunity cost
D) none of the above

Question

Quizplus · Accepted Answer

The most appropriate method for incorporating forms of country risk in a capital budgeting analysis is to estimate how cash flows would be affected by each form of risk. Country risk factors such as changes in government policies, economic conditions, and currency fluctuations can have a significant impact on the future cash flows of a project or investment. By estimating how these risks may affect future cash flows, a company can determine whether the potential returns from the investment outweigh the potential risks.

Perhaps the Most Appropriate Method for Incorporating Forms of Country