Deli-Delights Inc. is a U.S. company that is considering expanding its operations. Consider the discounted expected value of the 3-year contract that Deli-Delights Inc. may sign with Airbus from Europe. In the initial year of the deal, Airbus sells airplanes for 300 mln. It costs 140 to produce an airplane. The current exchange rate is $1.20/. Assume that 20 airplanes will be sold the first year. Make the following other assumptions in your valuation for Deli-Delights: a. The demand for airplanes is expected to grow at 20% for the second year and 25% for the third year. b. Euro-denominated values are expected to increase at the euro rate of inflation of 4%. c. The dollar is currently not expected to strengthen or weaken in real terms relative to the euro. d. The corporate income tax rate in Europe is 30%. e. The appropriate euro discount rate for the project is 12%. f. Deli-Delights Inc. typically establishes an account receivable for its customers. At any given time, the stock of the account receivable is expected to equal 15% of a given years revenue. g. Accepting the Airbus project will not require any major capital expenditures by Deli- Delights. 1. What is the dollar-value of the contract to Deli-Delights Inc.? 2. Imagine that Deli-Delights Inc. expects a successful expansion of its business after the realization of project with Airbus. Based on the free cash flows from the project, calculate the value of that expansion for infinite period. Assume that terminal growth rate equals 3% and after-expansion discount rate for the company is 10%