Think of a Swiss subsidiary (Swiss SG) of a US firm, Newport Systems. The current exchange rate is $0.70/SF. Swiss SG sells 5 million units @ SF15/unit. It has fixed overhead costs of SF 6 million and direct costs (labor, raw material, etc.) of SF 10/unit. The firm carries a straight line depreciation of SF 1 million each year and has a tax rate of 30%.

Now, assume that of the 5 million units, 3 million are sold at home and 2 million are exported. Prices remain sticky at home (same at SF15 / unit) but there is an increase in export prices by 33% to SF20 / unit).

Assume SF depreciates to $ 0.65 / SF. What is the Cash flows in $ post-depreciation of SF?

a.15.45 million

b.14.70 million

c.12.74 million

d.13.39 million