Assumptions Values Assumptions Values Dividend distribution per Initial investment in India (Rs) 100,000,000 year 75.009% US corporate tax Indian corporate tax rate 51.0096 rate 40.00% India risk premium to Sale price in year 5 (Rs) 160,000,000 WACC 6.0046 Annual Sales (Rs) 30,000,000 COGS (R.) 17.000,000 Depreciation (Rs) 1,000,000 TI's WACC 9.009%Texas Innovation [Tl] {U3} is considering investing s 100,000,000 in India to create a wholly owned tile manufacturing plant. After five years the subsidiary would be sold to Indian investors for $100,000,000. A pro forma income statement for the Indian operation predicts the generation of Rs8,000,000 of annual cash flow. 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 T| from India will equal ?5% of accounting income. The US. corporate tax rate is 40% and the Indian corporate tax rate is 54%. Because the Indian tax rate is greater than the US. tax rate, annual dividends paid to T| will not be subject to additional taxes in the United States. There are no capital gains taxes on the final sale. T| uses a weighted average cost of capital of 12% on domestic investments, but will add 0 percentage points for the Indian investment because of perceived greater risk. Tl forecasts the rupeefdollar exchange rate for December 31st on the next six years are listed below. Spot Today: Ba 50,! USD and every year exchange rate will increase by Fis4. For example, the next year exchange rate will be Es 54fUSD; two years from now, it will be He SBIUSD and so on