Your firm is based in France and is considering an investment opportunity in the United States. The project will last for 2 years and require an investment of USD 10,000,000 at time zero. This initial investment has to be depreciated by 50% the first year and the remaining 50% in the second year. Revenues are forecasted to be USD 8,000,000 and USD 12,000,000 in year 1 and year 2, respectively. Costs will amount to USD 1,500,000 in both years. Terminal value is expected to be zero. Additional information: tax rate is 30% in US and 40% in France. Current spot exchange rate is . Inflation rate in France is 4% and ( ) = /1.3 in the US is 6%

. a) Compute the NPV of the project in EUR using the WACC as discount rate. Assume the WACC in EUR to be 4%. Should the French company accept or reject the project?