A project in Singapore requires an initial investment of S$100M. Given the existing spot rate of $.73 per Singapore dollar. The project will be terminated at the end of Year 3, when the subsidiary will be sold. The price, demand, and variable cost of the product in Singapore are as follows: Year Price Demand Variable Cost 1 S$800 40,000 units S$100 2 S$920 40,000 units S$155 3 S$1080 50,000 units S$160 The fixed costs, such as overhead expenses, are estimated to be S$4 million per year. Singapore dollar is expected to appreciate 5% annually for the next three years. Singapore government will impose an income tax of 30 percent on income. In addition, it will impose a withholding tax of 5 percent on earnings remitted by the subsidiary. All cash flows received by the subsidiary are to be sent to the parent at the end of each year. The plant and equipment are depreciated over 10 years using the straight line depreciation method. Since the plant and equipment are initially valued at S$100 million, the annual depreciation expense is S$10 million. In three years, the subsidiary is to be sold and the company expects to receive S$48 million after subtracting capital gains taxes. Assume that this amount is not subject to a withholding tax. WACC = 15% a) Show the detailed CF computation in S$ and USD and determine the NPV of the project. Should the company accept this project? b) Assume that the companys funds are blocked until the subsidiary is sold. The funds to be remitted are reinvested at a rate of 5 percent (after taxes) until the end of Year 3. How is the projects NPV affected? Show your work.