8. A project in Japan requires an initial investment of 2 billion Japanese yen. The project is expected to generate net cash flows to the subsidiary of 3 billion and 4 billion yen in the two years of operation, respectively. The project has no salvage value. The current value of the yen is 110 yen per U.S. dollar, and the value of the yen is expected to remain constant over the next two years.

a. What is the NPV of this project if the required rate of return is 15 percent?

b. Repeat the question, except assume that the value of the yen is expected to be 120 yen per U.S. dollar after two years. Further assume that the funds are blocked and that the parent company will only be able to remit them back to the United States in two years. How does this affect the NPV of the project?