A business firm has a choice of two countries in which to undertake a project. The governments
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(a) Show that the firm is better off undertaking the project in Country 2 if there is no diversion there.
(b) For the firm to continue to undertake the project in Country 2, what is the maximum amount of diversion that Country 2 can force the firm to pay?
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a First calculate the present value of the profits over the next two years from each of the investme...View the full answer
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