26. Impact of Uncertainty on MNC Value. Minneapolis Co. is a major exporter of products toCanada. Today, an event occurred that has increased the uncertainty surrounding the Canadian dollar’s future value over the long term. Explain how this event can affect the valuation of Minneapolis Co.

ANSWER: The future dollar cash flows of Minneapolis Co. are now more uncertain, which can increase its cost of capital (the denominator of the MNC valuation equation), and reduce its valuation.