alculate Net Present Value

Given data

Initial Investment	U.S. Dollars	Euros
Beginning of Year 1	24,000,000	20,000,000

Total After-Tax Annual Cash Flow (in Euros)	Based on Current Tax Rates	Based on Possible Change in Tax Rates
Year 1	5,000,000	5,000,000
Year 2	6,000,000	5,500,000
Year 3	8,000,000	7,300,000

Probability of change in tax rates = 40%

Present value factors at 10%	PV Factor
Period 1	0.9091
Period 2	0.8265
Period 3	0.7513

Estimated terminal value	Euros
End of Year 3	14,000,000

Forecasted Exchange Rates	U.S. Dollars per Euro
Year 1	1.15
Year 2	1.13
Year 3	1.12

Required:

1. a. Determine the expected net present value of the potential foreign investment from a project perspective.
2. a-1. Show the calculation of NPV (in Euros) with current tax rates from a project perspective.
3. a-2. Show the calculation of NPV (in Euros) with possible change in tax rates from a project perspective.
4. a-3. Show the calculation of Expected Net Present Value from a project perspective.
5. b. Determine the expected net present value of the potential foreign investment from a parent company perspective.
6. b-1. Show the calculation of NPV (in U.S. Dollars) with current tax rates from a parent company perspective.
7. b-2. Show the calculation of NPV (in U.S. Dollars) with possible change in tax rates from a parent company perspective.
8. b-3. Show the calculation of Expected Net Present Value from a parent company perspective