Problem 2 [Cross-border Capital Budgeting] You work for an Israeli company considering investing in China's Sichuan province. The investment yield expected after-tax Chinese new yuan cash flows (in millions) are as follows: - Year 0:-CNY600 - Year 1: +CNY 200 - Year 2:+CNY500 - Year 3:+CNY300 The required return for this risk class is iIls=15 percent in Israeli new shekels and 11.745 percent in yuan. Expected inflation is 6 percent in shekels and 3 percent in yuan. Risk-free government bonds in Israel yield 8.12 percent in shekels. China Construction Bank bonds are risky and yield 6.09 percent in yuan. The spot exchange rate is So0USCNY= ILS0.5526/CNY. a. Assume the international parity conditions hold. Calculate Vo ins /icNY by discounting at the appropriate risk-adjusted yuan rate iCNY and then converting into shekels at the current spot rate. b. Assume the intermational parity conditions hold. Calculate Vills in ins by converting yuan into shekels at the expected future spot rates and then discounting at the appropriate rate in shekels