3. Schnell, Inc., has been approached by the government of Malaysia to engage in a project there over the next year. Schnells investment in the project is 1.1 million Malaysian ringgit (MR), and the project is expected to generate cash flows of MR1.5 million next year. The project will terminate at that time.

The current value of the ringgit is $.19, but Schnell believes that the ringgit will depreciate substantially over the next year. Specifically, it believes the ringgit will have a value of $.15 next year. Furthermore, Schnell will have to borrow for 1 year in order to pursue the project and will incur financing costs of 13 percent over the next year.

Assume that Schnell and the Malaysian government could engage in a parallel loan, in which the Malaysian government will give Schnell MR1.1 million in exchange for a loan in dollars at the current exchange rate. These loans will be repaid by both parties at the end of 1 year when the project is completed. Assume that next year, Schnell will pay the Malaysian government 16 percent interest on the MR1.1 million, and the Malaysian government will pay Schnell 8 percent interest on the dollar loan.

Calculate dollar and foreign currency cash inflows and outflows if the company engages in parallel loan.

ANSWER: $ Net CF: -$209,000 for Y0 and $198,550;

MR Net CF: 0 for Y0 and MR224,000 for Y1;

total net $CF for Y1: $232,150

Is the arrangement feasible if Schnells discount rate is 10%?

Please Show Work!!!! trying to learn how to solve this and answer the last question!