Regeneron is assessing the possibility of a new investment in its factory in Norway. The aim is to expand the production of newly discovered monoclonal antibodies for the cure of Covid-19. Within three years, Regeneron wants to make this product available to everybody and to a lower cost.

The initial investment is 100 million NOK and will last for three years. Revenues forecasts are 40 million NOK for the first two years and 50 million the last year. The costs will be 8 million NOK the first year then, they reduce by 5% per year in each of the remaining two years. The investment has to be depreciated equally over the three years.

The current spot exchange rate is S0(NOK/USD) = 9 and the inflation rates in US and Norway are 1% and 2%, respectively.

Suppose now that the Norwegian government has promised to arrange for a substantial portion of the initial cost to be financed at an attractive concessionary interest rate.

The conditions offered are the following:

- Regeneron can borrow 40 million NOK at a rate of 2% per year.

- The loan schedule for the principal is to be repaid in 3 equal instalments.

Compute the APV in USD by converting all the cash flows in USD.