The basic principles of capital budgeting are valid for both domestic and multinational capital budgeting analysis. however, it is important to recognize the unique risks that multinational firms face when they perform capital budgeting analysis in a foreign market. for instance, a u. s.-based multinational firm might conduct business in brazil, but any profits made must be repatriated, or returned, to the parent company and converted to u. s. dollars. there are significant risks inherent in these rather simple operations. in the table below, correctly identify whether each type of risk being described is an exchange-rate risk or a political risk. lorusso industries has considerable operations in indonesia, producing component electronic parts. lorusso's indonesian operation has been very successful, but the firm is now concerned about the effect of the decline in the value of the indonesian rupiah on the firm's profits.