An MNC is considering establishing a two-year project in New Zealand with a $25 million

initial investment. The firm's cost of capital is 11 percent. The required rate of return on this

project is 16 percent. The project is expected to generate cash flows of NZ$13 million in

Year 1 and NZ$28 million in Year 2, excluding the salvage value. Assume no taxes and a

stable exchange rate of $.71 per NZ$ over the next two years. (1) Calculate the present

value of cash flows, in U.S. dollars, for Years 1 and 2; (2) Calculate breakeven salvage

value in U.S. dollars; (3) Calculate break-even salvage value in NZ dollars.