Natural Mosaic. Natural Mosaic Company (U.S.) is considering investing Rs 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 Rs. A pro forma income statement for the Indian operation predicts the generation of Rs of annual cash flow, is listed in the popup table.

Sales revenue	Rs33,000,000
Less cash operating expenses	(16,000,000)
Gross income	Rs17,000,000
Less depreciation expenses	(1,000,000)
Earnings before interest and taxes	Rs16,000,000
Less Indian taxes at 50%	(8,000,000)
Net income	Rs8,000,000
Add back depreciation	1,000,000
Annual cash flow	Rs9,000,000

The initial investment will be made on December 31, 2011, and cash flows will occur on December 31st of each succeeding year. Annual cash dividends to Natural Mosaic from India will equal % of accounting income. The U.S. corporate tax rate is 40% and the Indian corporate tax rate is %. 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 % on domestic investments, but will add six percentage points for the Indian investment because of perceived greater risk. Natural Mosaic forecasts for the rupee/dollar exchange rate on December 31st for the next six years are listed in the popup table,

	Rs/$		Rs/$
2011	48	2014	63
2012	53	2015	68
2013	58	2016

a. What is the net present value and internal rate of return on this investment from the project's viewpoint?

a. Calculate the cash flows in Indian rupees for years 2011 through 2013 below:(Round to the nearest whole number.)

		2011		2012		2013
Annual cash flow (Rs)			Rs	9,000,000	Rs	9,000,000
Initial investment (Rs)	Rs	(56,000,000)
Sale value (Rs)
Cash flows for discounting (Rs)	Rs		Rs		Rs

b. What is the net present value and internal rate of return on this investment from the parent's viewpoint? a. Calculate the cash flows in Indian rupees for years 2011 through 2013 below:(Round to the nearest whole number.) 2011 2012 2013 Annual cash flow (Rs) Rs 9,000,000 Rs 9,000,000 Initial investment (Rs) Rs (56,000,000) Sale value (Rs) Cash flows for discounting (Rs) Rs Rs Rs