The Chief Financial Officer of a business group has to determine the correct discount rate for an investment in a new hotel in Guayaquil, Ecuador. The group has traditionally used the same discount rate for all projects and is now presented with several alternatives by his team. Estimating the correct country risk adjustment for the project is an important challenge. He knows that there is no clear solution to this challenge that is accepted by all practitioners and academics, but he has to present a recommendation to the board.

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Keywords Financial investment/markets, Financial markets, International business, Investment appraisal/return on investment, Country risk, CAPM, Emerging markets, Discount rate, Cost of equity, WACC
Persistent URL
Journal Emerald Emerging Markets Case Studies
Montiel, E, & Martínez, O. (2019). Hotel Business Inn. Emerald Emerging Markets Case Studies (Vol. 9). doi:10.1108/EEMCS-10-2019-0258