Question: need answer for the below questions Chapter 16. Capital Budgeting with Country Risk Analysis 2. Incorporating country risk in capital budgeting ( 20 points) A

need answer for the below questions

Chapter 16. Capital Budgeting with Country Risk Analysis 2. Incorporating country risk in capital budgeting ( 20 points) A US MNC in energy is using this capital budgeting model for a 4-year foreign project in Portugal. NPV=$10mil+1.152mil//51.1+1.1522ml//1.15+1.1532.5mil/ You should be able to understand what these numbers represent. Here is the generalized model. NPV=Inv0+(1+r)CF1/$ER1+(1+r)2CF2/$ER2+(1+r)3CF3/$ER3 The model did not capture the potential effects of a few events that happened recently. Considering potential country risks associated with the project, please suggest adjustments to the model. Note. You could illustrate with some arbitrary numbers but please explain the rationale behind using them. a. Portugal is set to break away from 25-year long budget deficit that led to EU bailout in 2014, and expecting budget surplus of 0.5% of GDP. ( 5 points) b. Standard \& Poor's, Fitch, and DBRS changed their ratings on Portugal's "debts" after years of considering it "junk" into "investment grade". (5 points)

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