A U.S. firm is considering purchasing a subsidiary in the UK. The subsidiary will cost 6M British pounds and will generate cash inflows of 1.2M pounds per year forever. The current exchange rate is 0.8 pounds/$. The average inflation rate over this period is expected to be 2% in the US. The current risk-free rate of interest is 4% in the US and 9% in the UK. Assume the cost of capital for this project is 10% on dollar investments. What is the approximate discount rate you would use to discount the cash flows if you were to evaluate this project using the foreign currency (pound) approach?

		15%
		10%
		5%
		13%
		9%