1.Use the following information to answer the next three questions:

Compact Computers. Inc., a video game development company, has decided to build production capability in the Philippines. At the moment, only the following summary of expected aftertax cash flows is available.

Year0123

Peso Cash inflows 718,800712,400812,400

Peso Cash outflows45,00029,60024,20064,300

$ Cash outflows21,0001,1502,2203,700

The exchange rate today is P 56.3628/$. Whiz expects the peso to depreciate by 4% per year against the dollar for the coming three years. The WACC for Whiz computers is 12%. Calculate the currency rate at the end of year 2.

a.P 56.9440/$

b.P 61.1576/$

c.P 60.9620/$

d.P 52.1106/$

2.What is the net present value of the dollar cash flows generated at the end of year three?

a.$ 6,435.93

b.$ 5,724.88

c.$ 10,678.23

d.$7,207.47

e.$6,450.47

3.Calculate the NPV of the project at time zero.

a.$ 5,384.31

b.$ 1,666.56

c.$ 667.57

d.$581.73