Assume that G Corp. is considering the establishment of a subsidiary in Norway. The initial investment required by the parent is $5 million. If the project is undertaken, G would terminate the project after four years. G's cost of capital is 13 percent, and the project has the same risk as G's existing projects. All cash flows generated from the project will be remitted to the parent at the end of each year. Listed below are the estimated cash flows the Norwegian subsidiary will generate over the project's lifetime in Norwegian kroner (NOK):

Year 1	Year 2	Year 3	Year 4
NOK10,000,000	NOK15,000,000	NOK17,000,000	NOK20,000,000

The current exchange rate of the Norwegian kroner is $.135. G's exchange rate forecasts for the Norwegian kroner over the project's lifetime are listed below:

Year 1	Year 2	Year 3	Year 4
$.13	$.14	$.12	$.15

a. What is the net present value of the Norwegian project? Show steps and discuss

b. Assume that NOK8,000,000 of the cash flow in Year 4 represents the salvage value. G is not completely certain that the salvage value will be this amount and wishes to determine the break-even salvage value, which is? Show steps and discuss.

c. G is also uncertain regarding the cost of capital. Recently, Norway has experienced some political turmoil. What is the net present value (NPV) of this project if a 16 percent cost of capital is used instead of 13 percent? Show steps and discuss.