Can someone please help me solve this problem? I don’t understand exactly how to do it.
2 . ( 20 ) A U.S . firm is planning to invest in U. K . The current spot rate is S . 20 / 6 , and the British pound will be expected to appreciateby 5% for each year . The initial investment is $20 million , andand the expected cash flows are $10 million and $ 12 million at the end ofthe first and the second year , respectively . Assume that the annual discount rates are 6% in the U.S . and 30% in the U. Ka Estimate V . if ( the net present value from a local subsidiary’s perspective )