Question Details

One of J.C. Penney- biggest targets 


1. How Country Risk Affects NPV. Explain how the capital budgeting analysis in the previous
question would need to be adjusted if there were three possible outcomes for the British pound
along with the possible outcomes for the British economy and corporate tax rate.


2. J.C. Penney- Country Risk Analysis. Recently, J.C. Penney decided to consider expanding into
various foreign countries; it applied a comprehensive country risk analysis before making its
expansion decisions. Initial screenings of 30 foreign countries were based on political and
economic factors that contribute to country risk. For the remaining 20 countries where country risk
was considered to be tolerable, specific country risk characteristics of each country were
considered. One of J.C. Penney- biggest targets is Mexico, where it planned to build and operate
seven large stores.
a. Identify the political factors that you think may possibly affect the performance of the J.C.
Penney stores in Mexico.



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