D Question 14 Barker Company, a U.S. based MNC is contemplating a foreign capital expenditure on a subsidiary in Botswana, Africa that would produce and sell tennis rackets locally. Barker's financial managers have asked the manufacturing, marketing, and financial departments to provide them with relevant inputs so they can apply a capital budgeting analysis to this project. In addition, some Barker executives have met with government officials in Botswana to discuss the proposed subsidiary. The initial cost of the project (in thousands) is BWP 16,000, where BWP represents the Botswana pula, the local currency. Operating cash flows will begin one year from today and are remitted back to the parent at the end of each year. The annual cash flows over the four-year economic life of the project in BWP are estimated to be 2,000. 4.000, 5.000, and 7,000, respectively. The Botswana government will also pay Barker BWP 4,500 at the end of the four years to assume ownership of the subsidiary. This payment will also be remitted back to the parent in the U.S. Barker has a required rate of return of 10 percent. The current spot rate of the BWP to the dollar is BWP 1 + $0.14. The pula is expected to depreciate by 5 percent each year over the life of the project. 4P a. What are the BWP/USD Conversion rates for Years 1-4? 6P b. What is the net present value on this project, in USD? 2P c. Using net present value as the sole decision criterion, should Barker engage in the foreign capital expenditure in the subsidiary in Botswana? 5P d. Based on this information, what is the amount, in Botswana pula, that the Botswana government would need to pay at the end of four years in order for Barker to "break-even"? 3P e. If the internal rate of return were to increase, how would this affect the decision to engage in the foreign capital expenditure in the subsidiary in Botswana (positively, negatively, the same)? Please briefly explain why (qualitatively...there is no need to use exact numbers)