Suppose that Sherman Co., a U.S.-based MNC is considering a plan to establish a subsidiary in Singapore. The ANC would establish the subsidiary using an upfront Investment of $10,000,000 and would sell the subsidiary after four years. While it is confident in the values of certain parameters of the capital budgeting analysis, there is some substantial risk in the tax rate on earnings remitted from Singapore as well as the salvage value. In particular, Sherman believes that there are two possible tax rates with the following probabilities. Possible Tax Rate Outcome Probability of Outcome 10.00% 70,00% 20.00% 30.00% 100% Additionally, Sherman believes that there are two possible salvage values with the following probabilities Possible Salvage Value Outcome Probability of Outcome $12,000,000 60.00% $7,000,000 40.00% 100% Since there are two possible values for the tax rate, and two possible values for the salvage value, there are four total scenarios as outlined in the following table Scenario 1 2 Withholding Tax Salvage Value 10.00% S$12,000,000 20.00% 5$12,000,000 10.00% 5$7,000,000 20.00% S$7,000,000 3 4 Given these scenarios, Sherman seeks to estimate the expected net present value of the project in the face of this uncertainty. Now that you have calculated the NPV for scenario 2, Sherman management has provided you with the net present value of the project under the other scenarios as well as shown in the table Given the probabilities of each tax rate scenario, and each salvage value scenario, complete the last column of the table, niling in the faint) probability of each scenario occurring Hint: Assume that the valut of the tax rate and the salvage value are independent of each other, Scenario Tax Rate Salvage Value NPV Probability 1 10.00 $12,000,000 $2,229,867 20.00% $12.000.000 51,252,161 10.00 $7,000,000 $800,484 20.00 57,000,000 -5177.222 2 3