Page 132 - 5.2 i. Manac Finance ITC Summarised Notes

CAPITAL INVESTMENT APPRAISAL

Foreign investment appraisal

• Although little consensus exist amongst experts as to the

best technique to use for the adjustment of country risk,

numerous techniques have been described, with various

levels of complexity. (Complex techniques for the

adjustment of country risk fall beyond the scope of the

curriculum.)

• We recommend that you study the techniques described in

this section rather than in the prescribed textbook.

• In this section we discuss two basic techniques that are

commonly used; both are based on the Capital Asset Pricing

Model. (This discussion is adapted from descriptions by

Correia [2011], Pereiro, [2002] and Damodaran [2009].)

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