Solitaire corporation is a swiss multinational manufacturing company. Currently their financial planners are considering undertaking a one-year project in the United States.The real discount rate required for the project is 12%. The inflation rate in Switzerland is 2% , and the inflation rate in the United States is 4%.
a) Compare the nominal discount rates for the two projects options,the first option is doing the project investment in US dollars , and the second option in their local currency the Swiss Franc?
b) Evaluate,and choose the best option. Include in your answer the significance of inflation rates in relation to Foreign Investment of multinational corporations.
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