OneUSF, a U.S. MNC based in Florida, is considering making a fixed direct investment in Italy. The Italian government has offered OneUSF a concessionary loan of 2,700,000 at a rate of 3 percent per annum. The current spot rate is $1.36/1.00 and the expected inflation rate is 4% in the U.S. and 2% in Italy. The normal borrowing rate is 7 percent in dollars and 6 percent in euros. The loan schedule calls for the principal to be repaid in three equal annual installments. The marginal corporate tax rate in Italy and the U.S. is 35%. What is the present value of the benefit of the concessionary loan?

Group of answer choices

$1,310,116

None of the above with the $10,000 of the correct answer

$117,160

$1,165,209

$51,360

OneUSF, a U.S. MNC based in Florida, plans to build a wholly owned manufacturing facility in Italy. The cost of constructing the manufacturing plant is estimated at 3,000,000. The Italian government will allow the plant to be depreciated straight-line over a 3-year period. The normal borrowing rate for OneUSF is 8 percent in dollars and 7 percent in euros. In dollar terms, OneUSF uses 12 percent all-equity cost of capital. Current exchange rate is $1.14/1.00. The long-run U.S. inflation rate per annum is 2.8 percent. The long-run Eurozone inflation rate per annum is 2.1 percent. The marginal corporate tax rate in Italy and the U.S. is 35%. What is the present value of thedepreciation tax shield? (Please keep 2 digits in decimals to get the right answer)

Group of answer choices

$974,510

$1,045,839

$1,010,684

$1,065,058

None of the above is within $10,000 of the correct answer