Question 2 Elite Co. has a subsidiary that makes software products in Singapore. It wants to assess the net present value of this project. It needs initial investment of SGD2 2 million and expects to have SGD3 million for the net earning at the end of the year one. Assume the existing exchange rate is SGD1 = USDO.73. The SGD exchange rate may decrease by 0.5%% each year in next 5 years. However, it is concerned about two forms of country risk. . First, there is 30% chance that Singapore goverment may require that the SGD cash flows earned by Elite at the end of one year be reinvested in Singapore for two years before it can be remilled (so that cash would not be remitted until 3 years from today). In this case. Elite would earn 4% after taxes on a bank deposit in Singapore during that second and third year. There is a 40% chance that the Singapore government imposes a special tax of 10%% on the amount that a foreign subsidiary must pay for earning remittance. Thewe two forms of country risk are independent. Elite's required rate of return on this probed is 21%, The expected value of the project's not present value (in USD) is closest to; aj - 16,500 b) - 15,000 c) 15.000 dj 16.500