Asked by Adrian Badillo on May 23, 2024
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The 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.
Cost of Capital
The rate of return that a company must earn on its investments to maintain its market value and satisfy its investors and creditors.
Foreign Project
A business venture or investment located outside the investor's domestic country, often subject to additional risks such as currency fluctuations and political instability.
Domestic Project
A project undertaken within a country's borders, focusing on local development or business activities.
- Scrutinize the economic risks tied to international trade activities, specifically those involving exchange rates and political instability.
- Evaluate the risks and returns of international investments and their impact on the cost of capital.
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Learning Objectives
- Scrutinize the economic risks tied to international trade activities, specifically those involving exchange rates and political instability.
- Evaluate the risks and returns of international investments and their impact on the cost of capital.
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