Question: Does Country Risk Matter for U.S. Projects? Point No. U.S.-based MNCs should consider country risk for foreign projects only. A U.S.-based MNC can account for

Does Country Risk Matter for U.S. Projects? Point

No. U.S.-based MNCs should consider country risk for foreign projects only. A U.S.-based MNC can account for U.S. economic conditions when estimating cash flows of a U.S. project or deriving the required rate of return on a project, but it does not need to consider country risk.

Counter-Point Yes. Country risk should be considered for U.S. projects. Country risk can indirectly affect the cash flows of a U.S. project. Consider a U.S. project in which supplies are produced and sent to a U.S. exporter. The demand for the supplies will be dependent on the demand for the exports over time, and the demand for exports over time may be dependent on country risk.

Who Is Correct? Use the Internet to learn more about this issue. Which argument do you support? Offer your own opinion on this issue.

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