Flagstaff Corp. is a U$.$S$.-$based MNC is considering establishing a three$-$year project in

Canada with a US $$38$ 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 $C$$$15$ million in Year $1,$ C $$20$m in year $2$

and $C$$$25$ million in Year $3,$ and is expected to have a salvage value of $C$$$30,000,000.$

Assume a $10\%$ tax on remitted funds, and a stable exchange rate of $$1\mathrm{.}33,$$$1\mathrm{.}30$ and $$1\mathrm{.}25$

per $C$$ in years $1,2$ and $3$ respectively.

All cash flows are remitted to the parent.

a$.$ What is the amount of US dollars that will be remitted to the parent company year? Hint:

use after tax cash flows.

b$.$ Which rate should be used to discount the cash flows?

c$.$ Calculate the present values of the remitted cash flows.

d$.$ What is the NPV of the project?

e$.$ Should the project be accepted?