Suppose that Alexander Co., a U.S.-based MNC, is trying to decide the location of a new...

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Suppose that Alexander Co., a U.S.-based MNC, is trying to decide the location of a new project in which they plan to invest. Alexander can invest in the new project in either the United States or Germany. Upon completion, the project will comprise 30.00% of Alexander's total invested funds, with the remaining 70.00% being invested in the United States. Forecasted information regarding the proposed project over a 5-year period, including the 70.00% of funds invested in the existing business, are shown in the following table: Mean expected annual return on investment (after taxes) Standard deviation of expected annual after-tax returns on investment Correlation of expected annual aftertax returns on investment with aftertax returns of existing U.S. business Characteristics of Proposed Project Existing Business Located in Located in United States Germany 20.00% 25.00% 25.00% 0.1 0.09 0.11 - 0.8 0.02 0.0021 0.0061 In the previous stage of this problem you found that the expec and the potential portfolio with the U.S.-based project - were the projects, as measured by the variance of their overall port hs for either portfolio - the potential portfolio with the Germany-based project Thus, Alexander wishes to analyze the risk involved with investing in each of 0.0071 r each scenario. 0.0031 If Alexander invests in the U.S.-based project, the overall varia based project, the overall variance of their portfolio would be 0.0071 eir portfolio would be 0.0066 If Alexander invests in the Germany- Suppose that Alexander Co., a U.S.-based MNC, is trying to decide the location of a new project in which they plan to invest. Alexander can invest in the new project in either the United States or Germany. Upon completion, the project will comprise 30.00% of Alexander's total invested funds, with the remaining 70.00% being invested in the United States. Forecasted information regarding the proposed project over a 5-year period, including the 70.00% of funds invested in the existing business, are shown in the following table: Mean expected annual return on investment (after taxes) Standard deviation of expected annual after-tax returns on investment Correlation of expected annual aftertax returns on investment with aftertax returns of existing U.S. business Characteristics of Proposed Project Existing Business Located in Located in United States Germany 20.00% 25.00% 25.00% 0.1 0.09 0.11 - 0.8 0.02 0.0021 0.0061 In the previous stage of this problem you found that the expec and the potential portfolio with the U.S.-based project - were the projects, as measured by the variance of their overall port hs for either portfolio - the potential portfolio with the Germany-based project Thus, Alexander wishes to analyze the risk involved with investing in each of 0.0071 r each scenario. 0.0031 If Alexander invests in the U.S.-based project, the overall varia based project, the overall variance of their portfolio would be 0.0071 eir portfolio would be 0.0066 If Alexander invests in the Germany-