Smith Enterprises is considering opening a new manufacturing plant in France. The cost of the new plant will be 25 million and the plant is expected to generate after tax cash flows of 10 million at the end of each year for the next 4 years. After that the plant will be worthless. The current /$ exchange rate is 0.8166/$. The expected rate of inflation for the U.S is 2.5% per year. The risk free rate in the U.S. is 4% and the risk free rate in France is 6%.

Refer to Smith Enterprises International Investment. What is the expected rate of inflation in France?

	a.	3.56%
	b.	6.52%
	c.	4.47%
	d.	5.00%