Spartan, Inc. is a U.S. MNC that wants to build a factory in Brazil that will pr

Question

Spartan, Inc. is a U.S. MNC that wants to build a factory in Brazil that will produce products for the Latin American market. Using a variety of techniques Spartan concludes that it has 3 political risk factors and 2 financial risk factors Each risk factor is assigned a rating from 1 to 6 where 1 represents lowest risk and 6 represents highest risk. The ratings assigned to the 3 political risk factors are 4.6 and 1; the corresponding weights assigned to these 3 factors are 20%, 45% and 35%. The ratings assigned to the 2 financial risk factors are 3ans, the corresponding weights assigned to these 2 factors are 40% and 60%. The company assigns a weight of 70% and 30% to the political and financial risk categories, respectively. Spartan will only accept foreign projects whose overal country risk rating is less than 3.5. Calculate Spartan's overall country risk for its proposed Brazilian investment project. Based on the company's acceptance criteria, should this Brazilian project be accepted or rejected? laborations ople etTutor urchase Course Time Running H 7 Mnutes 43 Seconds Materials ROY Evals 3.96; project should be accepted 45; project should be rejected 3.96; project should be rejected 3.2: project should be accepted

Explanation / Answer

Ans:-

Spartan INC country risk 3 Political risk factors 1 2 3 Ratings 4 6 1 Weight 20% 45% 35% Total Risk 0.8 2.7 0.35 3.85 2 Financal risk factors 1 2 Ratings 3 5 Weight 40% 60% Total Risk 1.2 3 = 4.2 3 Political risk factors 2 Financal risk factors Total overall risk 3.85 4.2 Weight 70% 30% Total Overall Risk 2.695 1.26 3.955 Spartan INC will accept project if rating is less than 3.5 in current project risk is 3.96 so they will reject foreign project

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