2. Chandra Microprocessors is about to begin producing and selling its prototype product, which is a new generation chip. Annual cash flows for the next six years are forecasted as follows:

Year	Cash Flow (Rs.)
1	-6,00,00,000
2	-150,00,000
3	250,00,000
4	300,00,000
5	400,00,000
6	500,00,000

1. Assume annual cash flows are expected to remain at Rs. 500,00,000 after Year 6 (i.e., Year 7 and thereafter). If Chandra Microprocessors investors want a 30% rate of return on their investment, calculate the ventures Present Value.
2. Now assume that the Year 7 cash flows are forecasted to be 600,00,000 in the stepping-stone year and are expected to grow at a 7% growth rate thereafter. Further, assume that the required rate of return on the investment will drop from 30% to 20% beginning in year 7 to reflect a reduction in operating and business risk. In other words assume that the required return will be 30% for years 1 to 6 and will become 20% from year 7 onwards. Calculate the ventures Present Value.