Question B3: (19 marks) Nexex, located in the UK, is evaluating the proposed purchase of new printing machines. The printers' base price is 65,000 and has a terminal value of 12,000. The company's cost of capital is 5%. The printers' expected life-time is 3 years. The net cash flows are as follows: Year 1 Year 2 Year 3 Net cash flow 21,000 22,000 18,000 (a) Find the net present value of this project (NPV). Should it be accepted? (6 marks) Suppose Nexex wishes to expand its operations in the US. The exchange rate at the time of investment is $1=0.75. (b) State the Relative purchasing power parity (PPP) formula. Use the PPP to find the exchange rate 1 year from now, 2 years from now and 3 years from now. The inflation rate in the U.S. (Ts) is 5 percent and in the UK 4 percent (r:) (4 marks) (c) What is the Adjusted Present Value (APV) capital budgeting framework? Why is the APV capital budgeting framework useful for analysing foreign capital expenditures? (3 marks) (d) Find the NPV in dollars. Should Nevex invest in the US? (6 marks) (Numbers should be rounded to at least 3 decimal places. Please include currency symbols S, in your answer)