Santa Isabel, a food company located in Chile in South America, is planning to expand its

operations internationally, and is considering buying a relatively small California$-$based

grocery chain store that specializes in South American food.

Annual revenues are expected to be a constant amount of $$10,000,000$ and the cost of goods,

$$7,000,000.$ General and Administrative expenses are estimated at $$500,000$ per year and

annual depreciation expense at $$500,000.$

The operations in California will pay $70\%$ of its accounting net profit to the parent firm,

Santa Isabel, as an annual cash dividend. Chilean taxes are calculated on grossed up

dividends from foreign countries, with a credit for host$-$country taxes already paid. The

corporate income tax rate in U$.$S$.$ is $30\%$ and the tax rate in Chile is lower at $25\%.$

Therefore, no additional income taxes will be payable in Chile.

Santa Isabel will base its valuation of the investment on after$-$tax dividends received at the

end of each of the first three years plus a terminal value as at the end of year $3.$ The Chilean

currency is the Chilean peso and is denoted CLP$$.$ The exchange rate against the US dollar

is as follows. The current exchange rate is CLP$$900\mathrm{.}00/$$$,$ and the Chilean peso is expected

to depreciate by $5\%$ each year.

Compute the expected cash flow, both in dollars and in pesos, Santa Isabel will receive at

the end of the first year.$|$