As an American investor, you are trying to calculate the present value of a 25 million cash flow that will occur one year in the future. You know that the spot exchange rate is S= $1.9397/ and one-year forward rate is F= $1.9581/ . You also know that the appropriate dollar cost of capital for this cash flow is 6.25% and that the appropriate pound cost of capital for this cash flow is 5.25%.

1. What is the present value of the 25 million cash flow from the standpoint of a British investor, and what is the dollar equivalent of this amount?
2. What is the present value of the 25 million cash flow from the standpoint of a U.S. investor who first converts the 25 million into dollars and then applies the dollar discount rate?