A U.S.-based MNC is considering establishing a two-year project in New Zealand with a US$32 million initial investment.

The firm's cost of capital is 13%.

The required rate of return on this project is 15%

The project is expected to generate cash flows of NZ $15 million in Year 1 and NZ$35 million in Year 2, and is expected to have a salvage value of NZ30,000,000.

Assume no taxes, and a stable exchange rate of and per NZS in year and 2 respectively.

All cash flows are remitted to the parent.

Required:

1. Calculate the US$ cash flows remitted to the parent company each year over the life of the project.
2. Calculate the present value of the US$ cash flows to the parent.
3. Calculate the Net Present of the project.
4. Should the MNC accept the project? Justify your answer.

No excel