Rollins Corporation presently has no existing business in Turkey but is considering the establishment of a subsidiary there.

The following information has been gathered to assess this project:

$-$ The initial investment required is TL $500$ million. In addition to initial investment on plant and equipment, TL$100$ million is needed for working capital.

$-$ The project will be terminated at the end of year $3,$ when the subsidiary will be sold.

$-$ The price, demand, and variable cost of the product in Turkey are as follows:

Year Price Demand Variable Cost$/$Unit

$1$ TL $5,00040,000$ units TL $300$

$2$ TL $5,50050,000$ units TL $330$

$3$ TL $6,00060,000$ units TL $363$

$-$ The fixed costs are estimated to be TL$60$ million per year $($no inflation impact$).$

$-$ The inflation in Turkey is expected to be about $10\%$ while U$.$S$.$ inflation is $3\%.$

$-$ The spot exchange rate is TL$8\mathrm{.}10$ per U$.$S$.$ dollar.

$-$ Turkish government imposes a corporate income tax of $20$ percent on income. In addition, it imposes a withholding tax of $5\%$ on funds $($annual cash flows$)$ remitted to Rollins Corporation by its subsidiary. The US government will not impose any additional taxes.

$-$ All cash flows received by subsidiary are to be sent to the parent at the end of each year. The subsidiary will use its working capital to support ongoing operations.

$-$The plant and equipment are depreciated over $10$ years using the straight$-$line depreciation method. Since the plant and equipment are initially valued at TL $500$ million, the annual depreciation expense is TL $50$ million.

$-$ In three years, the subsidiary is to be sold. The working capital will not be liquidated but will be used by the acquiring firm. Rollins expects to receive TL $550$ million after subtracting capital gains taxes when it sells the subsidiary.

$-$ Rollins requires a $15$ percent rate of return on this project.

a$)$ Evaluate this project from parent$$s perspective by using NPV and IRR techniques.

The NPV of project is $$\_\_\_\_\_\_\_\_\_\_\_\_$

The IRR of the project is $\_\_\_\_\_\_\_\_\_\%$