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Part B: 60 points Conceptual questions /Numerical problems 1. Severe political-risk or expropriation of assets: Suppose your multinational corporation has made an initial investment of $20 million in a foreign project with a WACC of 15% and that generates annual cashflow of $5 million forever. If there is a possibility that the foreign government may expropriate your project assets in the third year of the project how will you take this into account in evaluating the foreign project? Give a brief answer using a time-line and a binomial model for severe political risk (you need not do any calculations). (7 points)