Global Trade Inc. is considering a foreign investment with a useful life of 6 years through its subsidiary in Spain to manufacture car parts and initial investment amount is 17,000,000 . From this investment, the subsidiary expects 300,000 units of sales in the first year, which is expected to grow 10% for year 2 and 3, 5% in year 4, 4% in year 5 and remain the same in year 6. Additionally, the subsidiary expects to sell those parts for 25  during the first three years of the project and for 30  in the following years. Variable manufacturing cost is 10  per unit during the first three years of the project and for 12  in the following years. The subsidiary will have 2,000,000  fixed costs each year, total depreciation expense of the project will be 9,000,000  and company uses straight line depreciation. The company expects to sell the investment for 8,000,000  after all taxes at the end of 6 years. For working capital, subsidiary will borrow 5,000,000  from a Spanish bank which is subject to 8%.

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