If the required rate of return is 10%, will you accept the project or not why?

If the project provide the internal rate of return is 10% for project, then it would be
prefer to choose this project, As there are several quantitative methods to analyze the
investments. Such as Payback period, Discounted Payback period, NPV, IRR and
Profitability index. Among these quantitative methods, NPV and IRR provide the very
best and accurate result to opt the investment. As the current project has 10% IRR
which means that this project will provide the 10 percentage of the return over the life
of 5 year of the project. However, cash flows can also generate after this predefined
period also provide the benefit from this project. That why, using the IRR method is best
it consider the time value of money and reinvestment rate.
So as a conclusive, it is better to opt the investment based on the 10% IRR.

What is nominal Rate of interest?

If the inflation is 20% and the real rate of interest is 10% then the Nominal rate of
return will be 30%.

Foreign equity ownership restriction in UAE

Under the existing regime, UAE law provides that foreign investors generally can only
own up to 49% in a UAE mainland company. At least 51% of the shares in a UAE
mainland company must be owned by one or more UAE nationals, or a company which is
itself wholly owned by one or more UAE nationals. This means that the constitutional
documents of a UAE mainland company would state both the name of the local
shareholder, as the legal owner of not less than 51%, and the foreign shareholder, as
the legal owner of not more than 49%, making the foreign shareholder a minority
shareholder. UAE has imposed restriction however, they have implied the policy for
foreign investment to restrict the hold of the foreign investor in the UAE.

Factors that affect the FDI

The main factors that affect foreign direct investments are wages rate, labour skills,
tax rates, transport and infrastructure, size of economy (potential for growth), political
stability (Property rights), commodities, access to free trade areas and exchange rate.
Developing countries emerging economies and countries in transition due to advantages
related to FDI have liberalized their FDI regime and followed best policies to attract
investment. It has been recognized that the maximizing benefits of FDI for the host
country can be significant including technologies spillovers, human capital formation
support, enhancement of competitive business environment, contribution to
international trade integration and improvement of enterprise development. FDI can also
support not only economic benefits including improvement of environment and social
condition but also alleviating poverty of the nation.

There are two concepts of foreign direct investment (FDI) and two matching ways of
measuring it. One is that FDI is a particular form of the flow of capital across
international boundaries. It gives rise to a particular form of international assets for the
home countries, specifically, the value of holdings in entities, typically corporations,
controlled by a home-country resident or in which a home-country resident holds a
certain share of the voting rights. The other concept of direct investment is that it is a
set of economic activities or operations carried out in a host country by firms controlled
or partly controlled by firms in some other (home) country. These activities are, for
example, production, employment, sales, the purchase and use of intermediate goods
and fixed capital, and the carrying out of research.
The former of these two concepts is the one reflected in balance of payments accounts.
The measures of it, flows and stocks of direct investment, are the only virtually
ubiquitous quantitative indicators of FDI. However, if the effects of FDI stem from the
activity of the foreign-owned firms in their host countries, the balance-of-payments
measures have many defects for any examination of these impacts.

Interest rate are too high in turkey

Interest rates in Turkey are still “very, very high” and must come down this year, said
Vice President Fuat Oktay.
“We must bring them down to single digits,” Oktay said in an interview with state-run
Anadolu news agency on Friday, referring to the central bank’s benchmark interest rate
of 12 percent.
Turkey’s central bank has slashed borrowing costs for banks in half from 24 percent in
July, when President Recep Tayyip Erdoğan sacked and replaced its governor for failing
to support his government’s pro-growth policies.
Oktay underscored that the government is targeting an inflation rate of 8.5 percent in
2020 and 5 percent in 2023, Turkey’s centenary year. The central bank and the
country’s banks are now working in tandem to reduce interest rates, he said.
Erdoğan maintains that higher interest rates are inflationary, contradicting conventional
economic thinking that says central banks can use higher rates as a tool to slow price
increases.
Oktay spoke as the Turkish Statistical Institute announced that consumer price inflation
accelerated to 11.8 percent in December from 10.6 percent the previous month. The
government targeted CPI of 12 percent for the end of the year.
Inflation in Turkey had stood at 8.6 percent in October, the lowest level in almost three
years after a currency crisis in 2018 slashed consumer demand and led to negative
economic growth.

Predict the exchange rate

We predict the exchange rate using the interest rate parity

Lira/USD = 1+ 40% / 1 +5.53% x 0.14 = 0.1857