Q. A firm may incorporate a country risk rating into the capital budgeting analysis by: (Solved)

1. adjusting the NPV upward if the country risk rating has fallen (implying increased risk) below a benchmark level.

2. adjusting the discount rate upward as the country risk rating decreases (implying increased risk).

3. A and B

4. none of the above

  • b. adjusting the discount rate upward as the country risk rating decreases (implying increased risk).
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