5.Your company is contemplating on investing in a manufacturing facility in China. You are charged with doing the financial analysis for this project. You expect the cash flows (in Chinese RMB) for this project to last indefinitely. You estimated the following cash flows for 2020-2024 and that the cash flows will grow at a constant rate starting 2025.

Year FCF Other Data

2020 -82,000,000 RMB Growth rate of RMB FCF starting 2025 = 3%

2021 7,000,000 RMB Cost of Capital for similar U.S. Projects (WACC) = 10%

2022 8,000,000 RMB Inflation in the U.S. = 2%

2023 10,000,000 RMB Inflation in China = 6%

2024 12,000,000 RMB Spot rate = 6.5 RMB/USD

A. What is the appropriate discount rate you should use to discount the RMB cash flows?

B. What is the RMB NPV and IRR for this project? (If Excel is used, please cut and paste it here, showing all the cash flows and answers to this question.)

C. What is the USD NPV for this project? (Please show your calculation converting RMB NPV to USD NPV.)

D. What is the RMB cost of capital and RMB NPV if inflation in China rises to 8% and the U.S. inflation drops to 1%?

6.The Jupiter Corporation is acquiring the Sumoto Corporation.Neither firm has any debt outstanding. Jupiter has 180 million shares of stock outstanding with a market price of $15 per share. Sumoto has 80 million shares of stock outstanding with a market price of $7 per share.Jupiter's advisors estimate the benefits of synergy to have a present value of $80 million.

A. What is the estimated market value of the combined companies?

B. Suppose Jupiter pays $590 million in cash to buy 100 percent of the common stock of Sumoto.What is the NPV of the merger?

C. If Jupiter offers 18% of the combined company to Sumoto's shareholders, what is the NPV of the merger?