ABC, Inc. is a U.S. based MNC that is considering the development of a subsidiary in Ireland (whose currency is the euro) that would manufacture and sell golf clubs within the eurozone. The projects initial investment cost is 20 million euros. This project is expected to have a life of 5 years; at the end of the 5 year period, governments of the eurozone countries have collectively agreed to assume ownership of the subsidiary at a price of 10 million euros. Assume that there is no capital gains tax on the sale of the subsidiary. The net after cash flows to the subsidiary are estimated to be 6 million euros for each of the next 5 years. Assume that all subsidiary earnings are remitted back to the parent. Furthermore, assume that the government of Ireland imposes a withholding tax of 8% on the remitted earnings. ABC uses the current spot rate of the euro as a reasonable forecast of the spot rate during future periods. The current spot rate of the euro is $1.20 and this spot rate is used to convert all future euro based amounts into U.S. dollars. ABC's required rate of return on this project is 14%. Calculate the PV of the cash flows to the parent in the 5th year.

$18,624,000

$15,520,000

$9,672,722

$2,866,915