An ounce of gold currently costs 5100 shekels in Tel Aviv and $1,450 in Dollars. The shekel inflation rate is 13%, and the dollar inflation rate is 2.5%. You are considering opening a semiconductor plant in Israel. Setting up manufacturing will cost 25,000,000 shekels today and 25,000,000 shekels 2 years from today. You will receive payments of 40,000,000 shekels one, two and three years from today. Your US dollar cost of equity is 11%. Assume that there is no arbitrage in any markets there are no taxes, and that this project is 100% equity financial.

a. What should the exchange rate between dollars and shekels be today?

b. What should the exchange rate one, two and three year from today? Please us exact formula not the approximate formula.

c. That the NPV of this project to US shareholders who demand payment in US dollar?