4. (20 points) Zylon Co. is a U.S. firm that provides be paid S$2,750,000, S$3,025,000, and S$3,327, entire amount of the payment represents earnings since Zylon is subject to a 20 percent corporate income tax rate in technology software for the government of Singapore. It will 500, respectively at the end of each of the next three years. The created the technology software years ago. Zylon t the United States. Its other cash inflows (such as revenue) by its other cash outflows (due to operating expenses) each year, so its profits on the expected annual net cash flows. Its financing costs are not considered within its flows. The Singapore dollar (S5) is presently worth $.50, and Zylon uses that spot exchange rate Singapore contract represent its as a forecast of future exchange rates. The risk-free interest rate in the United States is 6 percent while the risk-free interest rate in Singapore is 10 percent. Zylon's capital structure is 50 percent debt and 50 percent equity. Zyion is charged an interest rate of 10 percent on its debt. Zylon's cost of equity is based on the CAPM. It expects that the U.S. annual market return will be 10 percent per year. Its beta is 1.5. Quiso Co., a U.S. firm, wants to acquire Zylon and offers Zylon a price of $2,900,000. Zylon's owner must decide if to sell the business at this price and hires you to make a recommendation. (a) (5 points) Compute Zylon's welghted average cost of capital (WACC). (b) (15 points) Suppose you evaluate Zylon's NPV. Fill out the blanks correspondingly in the following table. Year S$3,e25,8ee $1,512,s8e $382, 582 S$3,327,588 $1,663,758 Cashflow S$2,758,8e8 CF in dollars After-tax CF /(1+wACC) /(1+WACC) /(1+WACC) Discount rate N/A Present value $1,800,0e0 et present value-0+$1,ee0,ee0+F +GH 8