A. HP (USA) is considering opening a factory in Spain. The following data are given. a) The initial investment is 215 million euros. b) Current exchange rate ($/) = 1.2805. The spot rate is expected to move according to the PPP between the U.S. and Spain. U.S. and Spanish inflation rates are expected to average 3 and 5 percent per year respectively over the investment period. c) Remittable operating cash flows in local currency are estimated to be as follows: Cash flow (in millions) 30 37 3 45 4 60 72 The applicable discount rate is 7% A. HP (USA) is considering opening a factory in Spain. The following data are given. a) The initial investment is 215 million euros. b) Current exchange rate ($/) = 1.2805. The spot rate is expected to move according to the PPP between the U.S. and Spain. U.S. and Spanish inflation rates are expected to average 3 and 5 percent per year respectively over the investment period. c) Remittable operating cash flows in local currency are estimated to be as follows: Cash flow (in millions) 30 37 3 45 4 60 72 The applicable discount rate is 7%