Natural Mosaic. Natural Mosaic Company (U.S.) is considering investing INR50,000,000 in India to create a wholly...
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Natural Mosaic. Natural Mosaic Company (U.S.) is considering investing INR50,000,000 in India to create a wholly owned tile manufacturing plant to export to the European market. After five years, the subsidiary would be sold to Indian investors for INR100,000,000. A pro forma income statement for the Indian operation predicts the generation of INR13,000,000 of annual cash flow, is listed in the following table: The initial investment will be made on December 31, 2021, and cash flows will occur on December 31st of each succeeding year. Annual cash dividends to Natural Mosaic from India will equal 90% of accounting income. The U.S. corporate tax rate is 21% and the Indian corporate tax rate is 25%. Because the Indian tax rate is greater than the U.S. tax rate, annual dividends paid to Natural Mosaic will not be subject to additional taxes in the United States. There are no capital gains taxes on the final sale. Natural Mosaic uses a weighted average cost of capital of 16% on domestic investments, but will add six percentage points for the Indian investment because of perceived greater risk. Natural Mosaic forecasts the Indian rupee to U.S. dollar exchange rate for December 31st on the next six years are listed in the table: What is the net present value and internal rate of return on this investment? . Calculate the cash flows in Indian rupees for years 2021 through 2023 below: (Round to the nearest whole number.) Annual cash flow (INR) Initial investment (INR) Sale value (INR) Cash flows for discounting (INR) 2021 2022 13,000,000 (50,000,000) 2023 13,000,000 Calculate the cash flows in Indian rupees for years 2024 through 2026 below: (Round to the nearest whole number.) Annual cash flow (INR) Initial investment (INR) Sale value (INR) Cash flows for discounting (INR) 2024 13,000,000 2025 13,000,000 2026 13,000,000 100,000,000 The net present value on this investment from the project's viewpoint is INR . The internal rate of return on this investment from the project's viewpoint is (Round to the nearest whole number.) %. (Round to two decimal places.) Calculate the cash flows in U.S. dollars for years 2021 through 20123 below: (Round to the nearest whole number.) 2021 2022 Net income (INR) 12,000,000 Initial investment (INR) (50,000,000) Dividends received in the U.S. (INR) Sale value (INR) Net cash flows to parent, after-tax (INR) Expected exchange rate (INR/$) Net cash flows to parent, after-tax ($) 2023 12,000,000 47 52 57 Calculate the cash flows in U.S. dollars for years 2024 through 2026 below: (Round to the nearest whole number.) Net income (INR) Initial investment (INR) 2024 12,000,000 2025 12,000,000 2026 12,000,000 Calculate the cash flows in U.S. dollars for years 2024 through 2026 below: (Round to the nearest whole number.) Net income (INR) Initial investment (INR) Dividends received in the U.S. (INR) Sale value (INR) Net cash flows to parent, after-tax (INR) Expected exchange rate (INR/$) Net cash flows to parent, after-tax ($) 2024 12,000,000 2025 12,000,000 2026 12,000,000 100,000,000 62 62 67 72 The net present value on this investment from the parent's viewpoint is $ (Round to the nearest dollar.) The internal rate of return on this investment from the parent's viewpoint is ☐ %. (Round to two decimal places.) 1st o p Data table What is th (Click on the following icon in order to copy its contents into a spreadsheet.) Sales revenue Less cash operating expenses INR33,000,000 (16,000,000) Gross income Ow Less depreciation expenses 2) t (l ved Earnings before interest and taxes Less Indian taxes at 25% Net income Add back depreciation Annual cash flow op ng Print Done INR17,000,000 (1,000,000) INR16,000,000 (4,000,000) INR12,000,000 1,000,000 INR13,000,000 - ☑ Data table (Click on the following icon in order to copy its contents into a spreadsheet.) INR/$ INR/$ 2021 47 2024 62 2022 2023 534 52 2025 67 57 2026 72 Print Done ☑ Natural Mosaic. Natural Mosaic Company (U.S.) is considering investing INR50,000,000 in India to create a wholly owned tile manufacturing plant to export to the European market. After five years, the subsidiary would be sold to Indian investors for INR100,000,000. A pro forma income statement for the Indian operation predicts the generation of INR13,000,000 of annual cash flow, is listed in the following table: The initial investment will be made on December 31, 2021, and cash flows will occur on December 31st of each succeeding year. Annual cash dividends to Natural Mosaic from India will equal 90% of accounting income. The U.S. corporate tax rate is 21% and the Indian corporate tax rate is 25%. Because the Indian tax rate is greater than the U.S. tax rate, annual dividends paid to Natural Mosaic will not be subject to additional taxes in the United States. There are no capital gains taxes on the final sale. Natural Mosaic uses a weighted average cost of capital of 16% on domestic investments, but will add six percentage points for the Indian investment because of perceived greater risk. Natural Mosaic forecasts the Indian rupee to U.S. dollar exchange rate for December 31st on the next six years are listed in the table: What is the net present value and internal rate of return on this investment? . Calculate the cash flows in Indian rupees for years 2021 through 2023 below: (Round to the nearest whole number.) Annual cash flow (INR) Initial investment (INR) Sale value (INR) Cash flows for discounting (INR) 2021 2022 13,000,000 (50,000,000) 2023 13,000,000 Calculate the cash flows in Indian rupees for years 2024 through 2026 below: (Round to the nearest whole number.) Annual cash flow (INR) Initial investment (INR) Sale value (INR) Cash flows for discounting (INR) 2024 13,000,000 2025 13,000,000 2026 13,000,000 100,000,000 The net present value on this investment from the project's viewpoint is INR . The internal rate of return on this investment from the project's viewpoint is (Round to the nearest whole number.) %. (Round to two decimal places.) Calculate the cash flows in U.S. dollars for years 2021 through 20123 below: (Round to the nearest whole number.) 2021 2022 Net income (INR) 12,000,000 Initial investment (INR) (50,000,000) Dividends received in the U.S. (INR) Sale value (INR) Net cash flows to parent, after-tax (INR) Expected exchange rate (INR/$) Net cash flows to parent, after-tax ($) 2023 12,000,000 47 52 57 Calculate the cash flows in U.S. dollars for years 2024 through 2026 below: (Round to the nearest whole number.) Net income (INR) Initial investment (INR) 2024 12,000,000 2025 12,000,000 2026 12,000,000 Calculate the cash flows in U.S. dollars for years 2024 through 2026 below: (Round to the nearest whole number.) Net income (INR) Initial investment (INR) Dividends received in the U.S. (INR) Sale value (INR) Net cash flows to parent, after-tax (INR) Expected exchange rate (INR/$) Net cash flows to parent, after-tax ($) 2024 12,000,000 2025 12,000,000 2026 12,000,000 100,000,000 62 62 67 72 The net present value on this investment from the parent's viewpoint is $ (Round to the nearest dollar.) The internal rate of return on this investment from the parent's viewpoint is ☐ %. (Round to two decimal places.) 1st o p Data table What is th (Click on the following icon in order to copy its contents into a spreadsheet.) Sales revenue Less cash operating expenses INR33,000,000 (16,000,000) INR17,000,000 Gross income Ow Less depreciation expenses 2) t (l ved Earnings before interest and taxes Less Indian taxes at 25% Net income Add back depreciation Annual cash flow op ng Print Done (1,000,000) INR16,000,000 (4,000,000) INR12,000,000 1,000,000 INR13,000,000 - ☑ Data table (Click on the following icon in order to copy its contents into a spreadsheet.) INR/$ INR/$ 2021 47 2024 62 2022 2023 534 52 2025 67 57 2026 72 Print Done ☑ Natural Mosaic. Natural Mosaic Company (U.S.) is considering investing INR50,000,000 in India to create a wholly owned tile manufacturing plant to export to the European market. After five years, the subsidiary would be sold to Indian investors for INR100,000,000. A pro forma income statement for the Indian operation predicts the generation of INR13,000,000 of annual cash flow, is listed in the following table: The initial investment will be made on December 31, 2021, and cash flows will occur on December 31st of each succeeding year. Annual cash dividends to Natural Mosaic from India will equal 90% of accounting income. The U.S. corporate tax rate is 21% and the Indian corporate tax rate is 25%. Because the Indian tax rate is greater than the U.S. tax rate, annual dividends paid to Natural Mosaic will not be subject to additional taxes in the United States. There are no capital gains taxes on the final sale. Natural Mosaic uses a weighted average cost of capital of 16% on domestic investments, but will add six percentage points for the Indian investment because of perceived greater risk. Natural Mosaic forecasts the Indian rupee to U.S. dollar exchange rate for December 31st on the next six years are listed in the table: What is the net present value and internal rate of return on this investment? . Calculate the cash flows in Indian rupees for years 2021 through 2023 below: (Round to the nearest whole number.) Annual cash flow (INR) Initial investment (INR) Sale value (INR) Cash flows for discounting (INR) 2021 2022 13,000,000 (50,000,000) 2023 13,000,000 Calculate the cash flows in Indian rupees for years 2024 through 2026 below: (Round to the nearest whole number.) Annual cash flow (INR) Initial investment (INR) Sale value (INR) Cash flows for discounting (INR) 2024 13,000,000 2025 13,000,000 2026 13,000,000 100,000,000 The net present value on this investment from the project's viewpoint is INR . The internal rate of return on this investment from the project's viewpoint is (Round to the nearest whole number.) %. (Round to two decimal places.) Calculate the cash flows in U.S. dollars for years 2021 through 20123 below: (Round to the nearest whole number.) 2021 2022 Net income (INR) 12,000,000 Initial investment (INR) (50,000,000) Dividends received in the U.S. (INR) Sale value (INR) Net cash flows to parent, after-tax (INR) Expected exchange rate (INR/$) Net cash flows to parent, after-tax ($) 2023 12,000,000 47 52 57 Calculate the cash flows in U.S. dollars for years 2024 through 2026 below: (Round to the nearest whole number.) Net income (INR) Initial investment (INR) 2024 12,000,000 2025 12,000,000 2026 12,000,000 Calculate the cash flows in U.S. dollars for years 2024 through 2026 below: (Round to the nearest whole number.) Net income (INR) Initial investment (INR) Dividends received in the U.S. (INR) Sale value (INR) Net cash flows to parent, after-tax (INR) Expected exchange rate (INR/$) Net cash flows to parent, after-tax ($) 2024 12,000,000 2025 12,000,000 2026 12,000,000 100,000,000 62 62 67 72 The net present value on this investment from the parent's viewpoint is $ (Round to the nearest dollar.) The internal rate of return on this investment from the parent's viewpoint is ☐ %. (Round to two decimal places.) 1st o p Data table What is th (Click on the following icon in order to copy its contents into a spreadsheet.) Sales revenue Less cash operating expenses INR33,000,000 (16,000,000) Gross income Ow Less depreciation expenses 2) t (l ved Earnings before interest and taxes Less Indian taxes at 25% Net income Add back depreciation Annual cash flow op ng Print Done INR17,000,000 (1,000,000) INR16,000,000 (4,000,000) INR12,000,000 1,000,000 INR13,000,000 - ☑ Data table (Click on the following icon in order to copy its contents into a spreadsheet.) INR/$ INR/$ 2021 47 2024 62 2022 2023 534 52 2025 67 57 2026 72 Print Done ☑ Natural Mosaic. Natural Mosaic Company (U.S.) is considering investing INR50,000,000 in India to create a wholly owned tile manufacturing plant to export to the European market. After five years, the subsidiary would be sold to Indian investors for INR100,000,000. A pro forma income statement for the Indian operation predicts the generation of INR13,000,000 of annual cash flow, is listed in the following table: The initial investment will be made on December 31, 2021, and cash flows will occur on December 31st of each succeeding year. Annual cash dividends to Natural Mosaic from India will equal 90% of accounting income. The U.S. corporate tax rate is 21% and the Indian corporate tax rate is 25%. Because the Indian tax rate is greater than the U.S. tax rate, annual dividends paid to Natural Mosaic will not be subject to additional taxes in the United States. There are no capital gains taxes on the final sale. Natural Mosaic uses a weighted average cost of capital of 16% on domestic investments, but will add six percentage points for the Indian investment because of perceived greater risk. Natural Mosaic forecasts the Indian rupee to U.S. dollar exchange rate for December 31st on the next six years are listed in the table: What is the net present value and internal rate of return on this investment? . Calculate the cash flows in Indian rupees for years 2021 through 2023 below: (Round to the nearest whole number.) Annual cash flow (INR) Initial investment (INR) Sale value (INR) Cash flows for discounting (INR) 2021 2022 13,000,000 (50,000,000) 2023 13,000,000 Calculate the cash flows in Indian rupees for years 2024 through 2026 below: (Round to the nearest whole number.) Annual cash flow (INR) Initial investment (INR) Sale value (INR) Cash flows for discounting (INR) 2024 13,000,000 2025 13,000,000 2026 13,000,000 100,000,000 The net present value on this investment from the project's viewpoint is INR . The internal rate of return on this investment from the project's viewpoint is (Round to the nearest whole number.) %. (Round to two decimal places.) Calculate the cash flows in U.S. dollars for years 2021 through 20123 below: (Round to the nearest whole number.) 2021 2022 Net income (INR) 12,000,000 Initial investment (INR) (50,000,000) Dividends received in the U.S. (INR) Sale value (INR) Net cash flows to parent, after-tax (INR) Expected exchange rate (INR/$) Net cash flows to parent, after-tax ($) 2023 12,000,000 47 52 57 Calculate the cash flows in U.S. dollars for years 2024 through 2026 below: (Round to the nearest whole number.) Net income (INR) Initial investment (INR) 2024 12,000,000 2025 12,000,000 2026 12,000,000 Calculate the cash flows in U.S. dollars for years 2024 through 2026 below: (Round to the nearest whole number.) Net income (INR) Initial investment (INR) Dividends received in the U.S. (INR) Sale value (INR) Net cash flows to parent, after-tax (INR) Expected exchange rate (INR/$) Net cash flows to parent, after-tax ($) 2024 12,000,000 2025 12,000,000 2026 12,000,000 100,000,000 62 62 67 72 The net present value on this investment from the parent's viewpoint is $ (Round to the nearest dollar.) The internal rate of return on this investment from the parent's viewpoint is ☐ %. (Round to two decimal places.) 1st o p Data table What is th (Click on the following icon in order to copy its contents into a spreadsheet.) Sales revenue Less cash operating expenses INR33,000,000 (16,000,000) INR17,000,000 Gross income Ow Less depreciation expenses 2) t (l ved Earnings before interest and taxes Less Indian taxes at 25% Net income Add back depreciation Annual cash flow op ng Print Done (1,000,000) INR16,000,000 (4,000,000) INR12,000,000 1,000,000 INR13,000,000 - ☑ Data table (Click on the following icon in order to copy its contents into a spreadsheet.) INR/$ INR/$ 2021 47 2024 62 2022 2023 534 52 2025 67 57 2026 72 Print Done ☑
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2021 2022 2023 Annual cash flow INR 13000000 13000000 13000000 Initial investment INR 50000000 Sale ... View the full answer
Related Book For
Fundamentals of Multinational Finance
ISBN: 978-0205989751
5th edition
Authors: Michael H. Moffett, Arthur I. Stonehill, David K. Eiteman
Posted Date:
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