Nylon Co. is a US company that provides computer equipment to the Thai government. This will be paid THB 15,000,000 at the end of each of the next five years. The total payment amount represents the revenue since Nylon invented the computer many years ago. Nylon is subject to a corporate income tax rate of 30 percent in the United States. Other cash inflows (such as revenue) are expected to be offset by other cash outflows (due to operating expenses) each year, so the gain on the Singapore contract represents the expected annual net cash flow. Its financing costs are not taken into account in its cash flow estimates. The Thai Baht (THB) is currently valued at US$0.032, and Nylon uses that spot rate as an estimate of the future exchange rate. The risk-free interest rate in the United States is 7 percent while the risk-free rate in Thailand is 15 percent. Nylon's capital structure is 70 percent debt and 30 percent equity. Nylon worn

interest rate of 11 percent on the debt. Nylon's cost of equity is based on the CAPM. It is expected that the annual US market return will be 10 percent per year. The beta is 1.2. Porta Co., a US company, wants to acquire Nylon and is offering Nylon for $12 million. The Nylon owner must decide whether to sell the business at this price and hire you to make recommendations.

Estimate the NPV to Nylon as a result of selling the business, and make recommendations about whether the Nylon owner should sell the business at the offered price.