PARTI. ESSAY PROBLEMS Each question carries 5 marks (45=20 marks ) Direction: Read and analyze the problem/case and answers the question/s or requirement stated. Write your answers clearly. Spartan, Inc., is considering the development of a subsidiary in Singapore that would manufacture and sell tennis rackets locally. Spartan's financial managers have the executives have met with government officials in Singapore to discuss the proposed subsidiary. The project would end in four years. All relevant information follows. 1. Initial investment. The project would require an initial investment of 20 million Singapore dollars (S\$), which includes funds to support working capital. Given the existing spot rate after taxes restrictions on the cash flows to be sent back to the parent firm but does impose a 10 percent withholding tax on and funds sent to the parent, as mentioned previously 3. Exchange rates. The spot exchange rate of the Singapore dollar is $.50. Spartan uses the spot rate as its forecast for all future periods. 4. Salvage value. The Singapore government will pay the parent S$12 million to assume ownership of the subsidiary at the end of four years tax on the sale of the subsidiary. 5. Required rate of return. Spartan, Inc., requires a 15 percent return on this project. Identify relevant solution to address the issue highlighted in the case to judge the feasibility of this proposed project only if the present value of flows (including the salvage value) to be received by the parent exceeds the initial outlay. (20 Marks)