King Inc. Country Risk Analysis King Inc., a U. S. firm, is considering the establishment of a small subsidiary in Bulgaria which would produce food products. All ingredients can be obtained or produced in Bulgaria. The final products to be produced by the subsidiary would be sold in Bulgaria and other Eastern Bloc countries. King Inc. is very interested in this project, since there is little competition in that area. Three high-level managers of King, Inc. have been assigned the task of assessing the country risk of Bulgaria, Specifically, the managers were asked to list all characteristics of Bulgaria that could adversely affect the performance of this project. The decision on whether to undertake this project will only be made once this country risk analysis is completed and accounted for in the capital budgeting analysis. Since King Inc. has focused exclusively on domestic business in the past, it is not accustomed to country risk analysis. Required:
a. What factors related to Bulgaria’s government deserve to be considered?
b. What country-related factors can affect the demand for the food products to be produced by King, Inc.?
c. What country-related factors can affect the cost of production?

Which of the following actions is most likely to result in a decrease in the money supply? a. the discount rate on overnight loans is lowered. b. the government sells a new batch of treasury bonds. c. the federal reserve bank buys treasury bonds. d. the required reserve ratio for banks is decreased. 2b2t

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Calculate the cost of each capital component—in other words, the after-tax cost of debt, the cost of preferred stock (including flotation costs), and the cost of equity (ignoring flotation costs). use both the capm method and the dividend growth approach to find the cost of equity.calculate the cost of new stock using the dividend growth approach.what is the cost of new common stock based on the capm? (hint: find the difference between re and rs as determined by the dividend growth approach and then add that difference to the capm value for rs.)assuming that gao will not issue new equity and will continue to use the same target capital structure, what is the company’s wacc? e. suppose gao is evaluating three projects with the following characteristics.each project has a cost of $1 million. they will all be financed using the target mix of long-term debt, preferred stock, and common equity. the cost of the common equity for each project should be based on the beta estimated for the project. all equity will come from reinvested earnings.equity invested in project a would have a beta of 0.5 and an expected return of 9.0%.equity invested in project b would have a beta of 1.0 and an expected return of 10.0%.equity invested in project c would have a beta of 2.0 and an expected return of 11.0%.analyze the company’s situation, and explain why each project should be accepted or rejected g