$5/6/2025$

Use the following information to answer questions $15$ and $16.$

Havel Roboties Company $($a U$.$S$-$based firm$)$ is considering establishing a subsidiary in China to assemble industrial robots on January $1,$ Year $1.$ If Havel makes the investment, it will operate the plant for one year and then sell the building and equipment to Chinese investors.

The initial investment would be $$1,000,000.$

Havel will repatriate $100\%$ of the estimated net operating eash flows as dividends which is $3,000,000.$ The terminal value is $$6,000,000.$ The China withholding tax is $10\%$ on dividends and the terminal value. Neither the dividends nor the terminal value will be subject to U$.$S$.$

Havel uses a $16\%$ discount rate. The present value factor is $0\mathrm{.}862$ for the end of Year $1.$ income tax.

The exchange rate between the RMB and the US$ is expected to be $$ on Jan. $1,$ Year $1.$ and $6\mathrm{.}8=$$$1$ on Dec. $31.$ Year $1.$

What is the net present value of the investment from a project perspective?

A$.7,758,000$

B$.1,058,000$

C$.2,300,000$

D$.6,758,000$