Author Question: A motive for FDI includes A) the extraction of natural resources. B) a multinational corporation ... (Read 65 times)

jCorn1234 · **on:** Jul 1, 2018

A motive for FDI includes

A) the extraction of natural resources.
B) a multinational corporation attempting to jump over trade restrictions.
C) high transportation costs.
D) All of the above

Question 2

You win the 20 million state lottery, and you have a choice of taking an amount of money per year for the next 20 years or a flat payment now. The flat payment that the state offers you is 9.82 million.

a. What discount rate is the state using?
b. Should you take the money or the annuity?

Dunkey · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

D

Answer to Question 2

a. 8 (This is essentially the internal rate of return on the project.)
b. In general, it depends on what return you think you can get on the money. If you think you can do better than 8, you're better off with the cash.