9. An Indian firm is considering the possibility of building a plant to manufacture an industrial chemical in Thailand. The cost of investment is estimated to be Baht 25 million. The life of the investment is expected to be 12 years. It is expected that the annual net cash flow in real terms will be Baht 4 million. The current spot exchange rate is Baht 1.105/. The risk-free interest rates in Thailand and India are 12 per cent and 10 per cent, respectively. The expected inflation rate in Thailand is 8 per cent. The Indian firm considers the opportunity cost of capital to be 7.25 per cent above the risk-free rate. Should the Indian firm make investment in Thailand? Show NPV calculations in Indian rupees using cash flows in

(a) baht and

(b) rupees.