This report provides a comprehensive analysis of the country risk associated with Rio Tinto's Foreign Direct Investment (FDI) in a copper mine in Mongolia. The report delves into the political risks, including blocked funds, changing tax laws, public revolt, and the changing attitude of the Mongolian government towards multinational corporations. It also examines financial risk factors such as inflation, interest rates, GNP growth, exchange rates, and labor costs. The report further explores how these country risks can be incorporated into capital budgeting decisions, offering a detailed assessment of the challenges and opportunities faced by Rio Tinto in this international venture. The conclusion summarizes the findings and highlights the successful aspects of the FDI, while acknowledging the risks and mitigation strategies employed. The report is well-researched and includes relevant references to support the analysis, offering valuable insights into international business and finance. It also discusses risk premium, payback period, and certainty equivalent.
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