Consider this case: Pellegrini Southern Inc. is a U.S. firm evaluating a project in Australia. You have the following information about the project: a The project requires an investment of AU$915,000 today and is expected to generate cash flows of AU$850,000 at the end of each of the next two years. The current exchange rate of the U.S. dollar against the Australian dollar is $0.7755 per Australian dollar (AU$). The one-year forward exchange rate is $0.8022/AU$, and the two-year forward exchange rate is $0.8143/AU$. The firm's weighted average cost of capital (WACC) is 9%, and the project is of average risk. What is the dollar-denominated net present value (NPV) of this project? (Note: Do not round your intermediate calculations.) $498,559 $448,703 $598,271 $473,631 When companies evaluate project investment in foreign nations, they also have to consider the additional risk that foreign projects are exposed to compared to domestic projects, such as exchange rate risk and political risk. Expropriation is one such risk where the government of a country takes away a private business from its owners without appropriately compensating the owners. Which of the following actions should companies take to prevent expropriation? Check all that apply. Finance the subsidiary with local capital. Block the amount of cash flow coming from the subsidiary firm to the parent company. Structure the operations of the subsidiary such that the subsidiary derives much of its value only via its relationship or integration with the parent company. Use transfer pricing to buy raw materials from the parent company at the lowest possible price to minimize the profits the parent company can make