Marco Transport, a U.S. based company, is considering expanding its operations into a foreign country. The required investment at Time = 0 is $10 million. The firm forecasts total cash inflows of $4 million per year for 2 years, $5 million for the next 2 years, and then a possible terminal value of $8 million in year 5. In addition, due to political risk factors, Cindy believes that there is a 50% chance that the gross terminal value will be only $2 million and a 50% chance that it will be $8 million. However, the government of the host country will block 20% of all cash flows. Thus, cash flows that can be repatriated are 80% of those projected. Cindy's cost of capital is 15%, but it adds one percentage point to all foreign projects to account for exchange rate risk. Under these conditions, what is the project's NPV?
a.$1.81 million
b.$2.77 million
c.$3.09 million
d.$5.96 million
e.$7.39 million