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: +CNY200 - 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 S0IISS/CNY= ILS0.5526/CNY. a. Assume the international parity conditions hold. Calculate V0IIS/iCNY by discounting at the appropriate risk-adjusted yuan rate iCNY and then converting into shekels at the current spot rate. b. Assume the international parity conditions hold. Calculate V0ISS/iILS by converting yuan into shekels at the expected future spot rates and then discounting at the appropriate rate in shekels