- 8 Marks
AFM – Nov 2018 – L3 – Q2b – International investment and financing decisions
Evaluate the impact of profit repatriation restrictions and provide strategies to deal with blocked funds in international investments.
Question
Suppose the South African government changes its policy on profit repatriation and legislates that profit cannot be repatriated until termination or exit.
i) If Rock can invest blocked funds in South Africa for a 12% annual rate of return, by how much would the project’s NPV differ from your results in sub-question (a) above?
(5 marks)
ii) Suggest THREE (3) ways through which Rock can deal with the risk of blocked funds.
(3 marks)
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