Critics of adjusting discount rates to reflect a location's riskiness argue that it

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Adjusting discount rates to reflect a location's riskiness seems to be fairly widely practiced. However, critics of this method argue that it penalizes early cash flows too heavily and does not penalize distant cash flows enough. They point out that if political or economic collapse were expected in the near future, the investment would not occur anyway. So for any investment decisions, the political and economic risk being assessed is not of immediate possibilities, but rather at some distance in the future.

Critics of Adjusting Discount Rates to Reflect a Location's Riskiness