QUESTION 5

1. T&T, a US firm, has a Chinese subsidiary that manufactures and sells TVs in China.

   Current exchange rate: CNY6.25/USD

   Expects to sell 2000 TVs this year at CNY2800 each.

   Main input is priced in USD (USD120/unit)

   Fixed cost=CNY2M

   Depreciation = CNY0.9 million

   Tax rate=30%; assuming tax credits are available for immediate use if losses occur

   What are the operating cash flows in CNY and dollars? Please select the most suitable option

   	a.	CNY 1,369,960 and USD 218,146
   	b.	CNY 1,740,000 and USD 278,400
   	c.	CNY 1,284,960 and USD 204,611
   	d.	CNY 1,369,960 and USD 277,955