Abstract
ABSTRACT One of the major risks encountered in economic evaluation of foreign direct investment is the changes in future exchange rates that may affect the accuracy of the estimated economic worm of the investment. The objective of this article is to present a model for reducing the uncertainty associated with changes in foreign exchange rates when conducting economic evaluations of foreign direct investments. The model uses the Purchasing Power Parity Theorem and weighted averages for creating a procedural approach in which future changes in exchange rates are considered and included in the calculation of an overall profitability measure.
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