TEN is planning a major expansion into Latin America and has enlisted you in assessing whether it makes sense. You have been given the following information: The expansion will require investment in a new studio and broadcasting facilities in Sao Paulo, which will cost $2 billion (to be spent immediately), depreciable over 10 years to a salvage value of $500 million. Without the expansion, TEN expects to generate $500 million in annual revenues from Latin America each year for the next 10 years, and the expansion will triple those annual revenues. TEN expects to continue to generate an EBITDA margin of 40% on the incremental revenues. TEN will allocate $100 million in G&A costs to the Latin American operations, but 75% of these costs are fixed. These costs have not been considered in the calculation of the EBITDA margin on the incremental revenues. The project is expected to last ten years, but to keep the studio technologically updated, TEN will have to reinvest 20% of its depreciation back into the project every year as maintenance capital expenditures. You can assume that TEN is all-equity funded and that it faces an effective tax rate of 40% no matter where it operates. 1)Estimate the expected incremental cash flows for the investment over its 10-year life. 2)The cost of equity that TEN (correctly) used for its most recent investment (which was entirely in the US) was 7.7%. The cost of equity for the Latin American investment was set at 10.55%. Estimate the NPV of the Latin American Expansion