Taiwan Semiconductor (TSM) is considering a 2-year project in the U.S. The project's expected dollar cash flows consist of an initial investment of $100,000 with cash flows of $70,000 in year 1 and $60,000 in year 2. The risk-adjusted cost of capital for the project is 20%. The current exchange rate is NT$30=$1. Risk-free interest rates in the U.S. and Taiwan are:
U.S.
1-year: 4.0%
2-year: 7%
Taiwan:
1-year: 3%
2-year: 5%
What is the NPV of the project?
Note: During the calculations, the rounding of the numbers may impact the final answer. So select the closest answer.
Select one:
a. $12,532.86
b. -$63,166.67
c. -$52,900.77
d. $45,655.09
e. $23,090.74