3. Suppose that a US firm considers expanding its existing business line by investing $5 million. At the same time, the company also wants to invest $10 million in one of the following two projects: ABS food GTT motors Inc. in Canada Inc. in Brazil Expected return 9% 9% Standard deviation 12% 6% Correlation with its existing business 0.2 0.8 The company's existing business has a 6% expected return and a 15% standard deviation. What company does the US firm have to choose in terms of international diversification? Show all your work. A US firm plans to invest $3 million in the Japanese market. This project is expected to generate 100 million yen in year 1, 500 million yen in year 2, and 200 million yen in year 3. The discount rate is 8% and there is no salvage value at the end of year 3. However, there are some uncertainties in tax rate and exchange rate as follows: i) The local tax rate imposed on remitted funds would be either 40% with a 30% chance or 30% with a 70% chance. ii) The exchange rate over the next 3 years would be either $1 = 109 yen with a 40% chance or $1 = 101 yen with a 60% chance. Find the expected NPV based on all possible scenarios