Miller is evaluating a plan to brew and market a new porter beer in Europe. Th

Miller is evaluating a plan to brew and market a new porter beer in Europe. The new beer will be test marketed for 1 year in Belgium with up front costs of
(euro)20 million. No profits will be generated by the test market. There is a 50% chance that the test phase will warrant an additional (euro)400 million
investment. The expected annual after-tax cash flow the new beer in Europe is expected to be (euro)100 million per year for 15 years. If the test phase fails
the project will be abandoned. A required rate of return of 12.5% is required for the (euro)400 million investment. Since the test-market is speculative the
CFO believes that the firm should use a discount rate of 25% to determine the NPV for the decision to test market the product. The exchange rate between the
DOLLAR and EURO is $1.6/(euro)1. Assuming the risk-free EURO-denominated interest rate is 4.5% per year and the risk-free US interest rate is 1.5% per year
determine the NPV for the investment in test marketing the product.