cost of capital may be different for a foreign project than for an equivalent domestic project because foreign projects may be more or less risky.

Question

Quizplus · Accepted Answer

The cost of capital is determined by the level of risk associated with a project. Foreign projects may have different levels of risk due to factors such as political instability, currency fluctuations, and legal and regulatory differences, which can affect the cost of capital for a foreign project compared to an equivalent domestic project.

Cost of Capital May Be Different for a Foreign Project