If a company is located in a country with a relatively unstable political environment, management will require a lower rate of return on capital projects.

Question

Quizplus · Accepted Answer

A company located in a country with an unstable political environment would actually require a higher rate of return to compensate for the increased risk and uncertainty. This is because there is a greater likelihood of changes in government policies or regulations that could impact the business, potential civil unrest or conflict, and other factors that could negatively affect the investment.

If a Company Is Located in a Country with a Relatively