Natural Mosaic. Natural Mosaic Company (U.S.) is considering investing Rs56,000,000 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 Rs112,000,000. A pro forma income statement for the Indian operation predicts the generation of Rs10,500,000 of annual cash flow, is listed in the popup table. 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 90% of accounting income. The U.S. corporate tax rate is 40% and the Indian corporate tax rate is 50%. 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 15% 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, a. Calculate the cash flows in Indian rupees for years 2011 through 2013 below: (Round to the nearest whole number.) 2011 2012 2013 10,500,000 Rs 10,500,000 Rs (56,000,000) Rs Annual cash flow (Rs) Initial investment (Rs) Sale value (Rs) Cash flows for discounting (Rs) Rs Rs Rs Enter any number in the edit fields and then click Check Answer. 7 Check Answer parts remaining Clear All an - J.SI manufacturing plant to export mestors for Rs112,000,000. A pro forma income statement for the Indian operation predicts the generation of ,000 of annual cash flow, is listed in the popup table, !!!. The initial investment will be made on December Natural om X Data Table con 0 greater United capital of her eived Hom sk. Sales revenue Rs36,000,000 years are Less cash operating expenses (17,000,000) Gross income Rs 19,000,000 Less depreciation expenses (2,000,000) ate Jole number.) Earnings before interest and taxes Rs 17,000,000 Less Indian taxes at 50% (8,500,000) Net income R$8,500,000 1000 Add back depreciation 2,000,000 al in Annual cash flow Rs 10,500,000 the ual val Print Done sh fid saic. Natural Mosaic Company (U.S.) is considering investing Rs56,000,000 in India to create a wholly manufacturing plant to export to the European market. After five years, the subsidiary would be sold to stors for Rs112,000,000. A pro forma income statement for the Indian operation predicts the generation 000 of annual cash flow, is listed in the popup table, The initial investment will be made on Decem nd cash flows will occur on December 31st of each succeeding year. Annual cash dividends to Natural m India will equal 90% of accounting income. corporate tax rate is 40% and the Indian corporate tax rate is 50%. Because the Indian tax rate is greater sr United er x capital om Data Table ceived k. years a e Rs/$ Rs/$ te 2011 2014 60 ole nur 2012 52 2015 64 2013 56 2016 68 al 1000 - 48 Print Done val flows for discounting (Rs) Rs Rs Rs Natural Mosaic. Natural Mosaic Company (U.S.) is considering investing Rs56,000,000 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 Rs112,000,000. A pro forma income statement for the Indian operation predicts the generation of Rs10,500,000 of annual cash flow, is listed in the popup table. 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 90% of accounting income. The U.S. corporate tax rate is 40% and the Indian corporate tax rate is 50%. 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 15% 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, a. Calculate the cash flows in Indian rupees for years 2011 through 2013 below: (Round to the nearest whole number.) 2011 2012 2013 10,500,000 Rs 10,500,000 Rs (56,000,000) Rs Annual cash flow (Rs) Initial investment (Rs) Sale value (Rs) Cash flows for discounting (Rs) Rs Rs Rs Enter any number in the edit fields and then click Check Answer. 7 Check Answer parts remaining Clear All an - J.SI manufacturing plant to export mestors for Rs112,000,000. A pro forma income statement for the Indian operation predicts the generation of ,000 of annual cash flow, is listed in the popup table, !!!. The initial investment will be made on December Natural om X Data Table con 0 greater United capital of her eived Hom sk. Sales revenue Rs36,000,000 years are Less cash operating expenses (17,000,000) Gross income Rs 19,000,000 Less depreciation expenses (2,000,000) ate Jole number.) Earnings before interest and taxes Rs 17,000,000 Less Indian taxes at 50% (8,500,000) Net income R$8,500,000 1000 Add back depreciation 2,000,000 al in Annual cash flow Rs 10,500,000 the ual val Print Done sh fid saic. Natural Mosaic Company (U.S.) is considering investing Rs56,000,000 in India to create a wholly manufacturing plant to export to the European market. After five years, the subsidiary would be sold to stors for Rs112,000,000. A pro forma income statement for the Indian operation predicts the generation 000 of annual cash flow, is listed in the popup table, The initial investment will be made on Decem nd cash flows will occur on December 31st of each succeeding year. Annual cash dividends to Natural m India will equal 90% of accounting income. corporate tax rate is 40% and the Indian corporate tax rate is 50%. Because the Indian tax rate is greater sr United er x capital om Data Table ceived k. years a e Rs/$ Rs/$ te 2011 2014 60 ole nur 2012 52 2015 64 2013 56 2016 68 al 1000 - 48 Print Done val flows for discounting (Rs) Rs Rs Rs