An MNC is considering establishing a two-year project in New Zealand with a $30 million initial investment. The firm's cost of capital is 12%. The required rate of return on this project is 18%. The project is expected to generate cash flows of NZ$12 million in Year 1 and NZ$30 million in Year 2, excluding the salvage value. Assume no taxes, and a stable exchange rate of $.60 per NZ$ over the next two years. All cash flows are remitted to the parent. What is the break-even salvage value?

Hint: use this formula below

Break-even

salvage

= [Initial outlay PV of cash flows] (1 + k) ^m

value

about NZ$11 million.

about NZ$15 million.

about NZ$19 million.

about NZ$22 million.