en STEP 3 of 4 Suppose that Sherman coa U.S.-based MC is considering a plan to establish a subsidiary in Singapore. The MNC would establish the subuldiary using an upfront investment of $10,000,000 and would sell the subsidiary after four years. While it is confident in the values of certain parameters of the capital budgeting analysis, there is some substantial risk in the tax rate on earnings remitted from Singapore as well as the salvage value In particular, Sherman believes that there are two possible tax rates with the following probabilities. Possible Tax Rate Outcome 10.00% Probability of Outcome 70.00% 30.00% 20.00% 10096 Additionally, Sherman believes that there are two possible salvage values with the following probabilities Possible Salvage Value Outcome $12,000,000 $7,000,000 Probability of Outcome 60.0096 40.00% Additionally, Sherman believes that there are two possible salvage values with the following probabilities, Possible Salvage Value Outcome $12,000,000 $7,000,000 Probability of Outcome 60.00% 40.00% 100% Since there are two possible values for the tax rate, and two possible values for the salvage value, there are four total scenarios as outlined in the following table. Scenario 1 Withholding Tax 10.00% 20.00% Salvage Value S$12,000,000 S$12,000,000 2 3 10.00% S$7,000,000 4 20.00% S$7,000,000 Given these scenarios, Sherman seeks to estimate the expected net present value of the project in the face of this uncertainty, Now that you have calculated the NPV for scenario 2. Sherman management has provided you with the net present value of the project under the other scenarios as well, as shown in the ta de Given the probabilities of each tax rate scenario, and each salvage value scenario, complete the last column of the table, filling in the joine) probability of each scenario occurring. Hint: Assume that the value of the tax rate and the salvage value are independent of each other. Scenario Tax Rate NPV Probability 1 10.0096 Salvage Value $12,000,000 $12,000,000 $3,234,161 $2,144,868 2 20.00% 90 3 10.0096 $7,000,000 $1,804,778 4 20.0096 $7,000,000 $715,485