FIN4802 Assignment 1 2025

FIN4802
ASSIGNMENT 1 2025

UNIQUE NO: 244150
DUE DATE: 21 MAY 2025

, FIN4802 – Assignment 1 (2025)

Question 1 (8 Marks): Should Mkhize Ltd consider South Africa for investment?

To determine whether Mkhize Ltd should invest in South Africa, we must assess the
country's overall risk rating by combining both political and financial risk factors,
using the given weights and scores.

Step 1: Weighted Political Risk Score

Political risk is weighted at 85% by Mkhize Ltd. The company has provided scores and
internal weights for individual political risk components:

1. Blockage of Fund Transfers
o Rating: 7
o Weight within political risk: 65%
o Contribution: 7×0.65=4.557 \times 0.65 = 4.557×0.65=4.55
2. Bureaucracy
o Rating: 3
o Weight within political risk: 55%
o Contribution: 3×0.55=1.653 \times 0.55 = 1.653×0.55=1.65

Total raw political score = 4.55+1.65=6.204.55 + 1.65 = 6.204.55+1.65=6.20

Now apply the overall political weight of 85%:

Weighted Political Score = 6.20×0.85=5.276.20 \times 0.85 = 5.276.20×0.85=5.27

Step 2: Weighted Financial Risk Score