Natural Mosaic. Natural Mosaic Company (U.S.) is considering investing INR50,000,000 in India to create a wholly...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Natural Mosaic. Natural Mosaic Company (U.S.) is considering investing INR50,000,000 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 INR100,000,000. A pro forma income statement for the Indian operation predicts the generation of INR13,000,000 of annual cash flow, is listed in the following table: 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 Natural Mosaic from India will equal 90% of accounting income. The U.S. corporate tax rate is 21% and the Indian corporate tax rate is 25%. 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 16% on domestic investments, but will add six percentage points for the Indian investment because of perceived greater risk. Natural Mosaic forecasts the Indian rupee to U.S. dollar exchange rate for December 31st on the next six years are listed in the table: What is the net present value and internal rate of return on this investment? . Calculate the cash flows in Indian rupees for years 2021 through 2023 below: (Round to the nearest whole number.) Annual cash flow (INR) Initial investment (INR) Sale value (INR) Cash flows for discounting (INR) 2021 2022 13,000,000 (50,000,000) 2023 13,000,000 Calculate the cash flows in Indian rupees for years 2024 through 2026 below: (Round to the nearest whole number.) Annual cash flow (INR) Initial investment (INR) Sale value (INR) Cash flows for discounting (INR) 2024 13,000,000 2025 13,000,000 2026 13,000,000 100,000,000 The net present value on this investment from the project's viewpoint is INR . The internal rate of return on this investment from the project's viewpoint is (Round to the nearest whole number.) %. (Round to two decimal places.) Calculate the cash flows in U.S. dollars for years 2021 through 20123 below: (Round to the nearest whole number.) 2021 2022 Net income (INR) 12,000,000 Initial investment (INR) (50,000,000) Dividends received in the U.S. (INR) Sale value (INR) Net cash flows to parent, after-tax (INR) Expected exchange rate (INR/$) Net cash flows to parent, after-tax ($) 2023 12,000,000 47 52 57 Calculate the cash flows in U.S. dollars for years 2024 through 2026 below: (Round to the nearest whole number.) Net income (INR) Initial investment (INR) 2024 12,000,000 2025 12,000,000 2026 12,000,000 Calculate the cash flows in U.S. dollars for years 2024 through 2026 below: (Round to the nearest whole number.) Net income (INR) Initial investment (INR) Dividends received in the U.S. (INR) Sale value (INR) Net cash flows to parent, after-tax (INR) Expected exchange rate (INR/$) Net cash flows to parent, after-tax ($) 2024 12,000,000 2025 12,000,000 2026 12,000,000 100,000,000 62 62 67 72 The net present value on this investment from the parent's viewpoint is $ (Round to the nearest dollar.) The internal rate of return on this investment from the parent's viewpoint is ☐ %. (Round to two decimal places.) 1st o p Data table What is th (Click on the following icon in order to copy its contents into a spreadsheet.) Sales revenue Less cash operating expenses INR33,000,000 (16,000,000) Gross income Ow Less depreciation expenses 2) t (l ved Earnings before interest and taxes Less Indian taxes at 25% Net income Add back depreciation Annual cash flow op ng Print Done INR17,000,000 (1,000,000) INR16,000,000 (4,000,000) INR12,000,000 1,000,000 INR13,000,000 - ☑ Data table (Click on the following icon in order to copy its contents into a spreadsheet.) INR/$ INR/$ 2021 47 2024 62 2022 2023 534 52 2025 67 57 2026 72 Print Done ☑ Natural Mosaic. Natural Mosaic Company (U.S.) is considering investing INR50,000,000 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 INR100,000,000. A pro forma income statement for the Indian operation predicts the generation of INR13,000,000 of annual cash flow, is listed in the following table: 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 Natural Mosaic from India will equal 90% of accounting income. The U.S. corporate tax rate is 21% and the Indian corporate tax rate is 25%. 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 16% on domestic investments, but will add six percentage points for the Indian investment because of perceived greater risk. Natural Mosaic forecasts the Indian rupee to U.S. dollar exchange rate for December 31st on the next six years are listed in the table: What is the net present value and internal rate of return on this investment? . Calculate the cash flows in Indian rupees for years 2021 through 2023 below: (Round to the nearest whole number.) Annual cash flow (INR) Initial investment (INR) Sale value (INR) Cash flows for discounting (INR) 2021 2022 13,000,000 (50,000,000) 2023 13,000,000 Calculate the cash flows in Indian rupees for years 2024 through 2026 below: (Round to the nearest whole number.) Annual cash flow (INR) Initial investment (INR) Sale value (INR) Cash flows for discounting (INR) 2024 13,000,000 2025 13,000,000 2026 13,000,000 100,000,000 The net present value on this investment from the project's viewpoint is INR . The internal rate of return on this investment from the project's viewpoint is (Round to the nearest whole number.) %. (Round to two decimal places.) Calculate the cash flows in U.S. dollars for years 2021 through 20123 below: (Round to the nearest whole number.) 2021 2022 Net income (INR) 12,000,000 Initial investment (INR) (50,000,000) Dividends received in the U.S. (INR) Sale value (INR) Net cash flows to parent, after-tax (INR) Expected exchange rate (INR/$) Net cash flows to parent, after-tax ($) 2023 12,000,000 47 52 57 Calculate the cash flows in U.S. dollars for years 2024 through 2026 below: (Round to the nearest whole number.) Net income (INR) Initial investment (INR) 2024 12,000,000 2025 12,000,000 2026 12,000,000 Calculate the cash flows in U.S. dollars for years 2024 through 2026 below: (Round to the nearest whole number.) Net income (INR) Initial investment (INR) Dividends received in the U.S. (INR) Sale value (INR) Net cash flows to parent, after-tax (INR) Expected exchange rate (INR/$) Net cash flows to parent, after-tax ($) 2024 12,000,000 2025 12,000,000 2026 12,000,000 100,000,000 62 62 67 72 The net present value on this investment from the parent's viewpoint is $ (Round to the nearest dollar.) The internal rate of return on this investment from the parent's viewpoint is ☐ %. (Round to two decimal places.) 1st o p Data table What is th (Click on the following icon in order to copy its contents into a spreadsheet.) Sales revenue Less cash operating expenses INR33,000,000 (16,000,000) INR17,000,000 Gross income Ow Less depreciation expenses 2) t (l ved Earnings before interest and taxes Less Indian taxes at 25% Net income Add back depreciation Annual cash flow op ng Print Done (1,000,000) INR16,000,000 (4,000,000) INR12,000,000 1,000,000 INR13,000,000 - ☑ Data table (Click on the following icon in order to copy its contents into a spreadsheet.) INR/$ INR/$ 2021 47 2024 62 2022 2023 534 52 2025 67 57 2026 72 Print Done ☑ Natural Mosaic. Natural Mosaic Company (U.S.) is considering investing INR50,000,000 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 INR100,000,000. A pro forma income statement for the Indian operation predicts the generation of INR13,000,000 of annual cash flow, is listed in the following table: 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 Natural Mosaic from India will equal 90% of accounting income. The U.S. corporate tax rate is 21% and the Indian corporate tax rate is 25%. 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 16% on domestic investments, but will add six percentage points for the Indian investment because of perceived greater risk. Natural Mosaic forecasts the Indian rupee to U.S. dollar exchange rate for December 31st on the next six years are listed in the table: What is the net present value and internal rate of return on this investment? . Calculate the cash flows in Indian rupees for years 2021 through 2023 below: (Round to the nearest whole number.) Annual cash flow (INR) Initial investment (INR) Sale value (INR) Cash flows for discounting (INR) 2021 2022 13,000,000 (50,000,000) 2023 13,000,000 Calculate the cash flows in Indian rupees for years 2024 through 2026 below: (Round to the nearest whole number.) Annual cash flow (INR) Initial investment (INR) Sale value (INR) Cash flows for discounting (INR) 2024 13,000,000 2025 13,000,000 2026 13,000,000 100,000,000 The net present value on this investment from the project's viewpoint is INR . The internal rate of return on this investment from the project's viewpoint is (Round to the nearest whole number.) %. (Round to two decimal places.) Calculate the cash flows in U.S. dollars for years 2021 through 20123 below: (Round to the nearest whole number.) 2021 2022 Net income (INR) 12,000,000 Initial investment (INR) (50,000,000) Dividends received in the U.S. (INR) Sale value (INR) Net cash flows to parent, after-tax (INR) Expected exchange rate (INR/$) Net cash flows to parent, after-tax ($) 2023 12,000,000 47 52 57 Calculate the cash flows in U.S. dollars for years 2024 through 2026 below: (Round to the nearest whole number.) Net income (INR) Initial investment (INR) 2024 12,000,000 2025 12,000,000 2026 12,000,000 Calculate the cash flows in U.S. dollars for years 2024 through 2026 below: (Round to the nearest whole number.) Net income (INR) Initial investment (INR) Dividends received in the U.S. (INR) Sale value (INR) Net cash flows to parent, after-tax (INR) Expected exchange rate (INR/$) Net cash flows to parent, after-tax ($) 2024 12,000,000 2025 12,000,000 2026 12,000,000 100,000,000 62 62 67 72 The net present value on this investment from the parent's viewpoint is $ (Round to the nearest dollar.) The internal rate of return on this investment from the parent's viewpoint is ☐ %. (Round to two decimal places.) 1st o p Data table What is th (Click on the following icon in order to copy its contents into a spreadsheet.) Sales revenue Less cash operating expenses INR33,000,000 (16,000,000) Gross income Ow Less depreciation expenses 2) t (l ved Earnings before interest and taxes Less Indian taxes at 25% Net income Add back depreciation Annual cash flow op ng Print Done INR17,000,000 (1,000,000) INR16,000,000 (4,000,000) INR12,000,000 1,000,000 INR13,000,000 - ☑ Data table (Click on the following icon in order to copy its contents into a spreadsheet.) INR/$ INR/$ 2021 47 2024 62 2022 2023 534 52 2025 67 57 2026 72 Print Done ☑ Natural Mosaic. Natural Mosaic Company (U.S.) is considering investing INR50,000,000 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 INR100,000,000. A pro forma income statement for the Indian operation predicts the generation of INR13,000,000 of annual cash flow, is listed in the following table: 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 Natural Mosaic from India will equal 90% of accounting income. The U.S. corporate tax rate is 21% and the Indian corporate tax rate is 25%. 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 16% on domestic investments, but will add six percentage points for the Indian investment because of perceived greater risk. Natural Mosaic forecasts the Indian rupee to U.S. dollar exchange rate for December 31st on the next six years are listed in the table: What is the net present value and internal rate of return on this investment? . Calculate the cash flows in Indian rupees for years 2021 through 2023 below: (Round to the nearest whole number.) Annual cash flow (INR) Initial investment (INR) Sale value (INR) Cash flows for discounting (INR) 2021 2022 13,000,000 (50,000,000) 2023 13,000,000 Calculate the cash flows in Indian rupees for years 2024 through 2026 below: (Round to the nearest whole number.) Annual cash flow (INR) Initial investment (INR) Sale value (INR) Cash flows for discounting (INR) 2024 13,000,000 2025 13,000,000 2026 13,000,000 100,000,000 The net present value on this investment from the project's viewpoint is INR . The internal rate of return on this investment from the project's viewpoint is (Round to the nearest whole number.) %. (Round to two decimal places.) Calculate the cash flows in U.S. dollars for years 2021 through 20123 below: (Round to the nearest whole number.) 2021 2022 Net income (INR) 12,000,000 Initial investment (INR) (50,000,000) Dividends received in the U.S. (INR) Sale value (INR) Net cash flows to parent, after-tax (INR) Expected exchange rate (INR/$) Net cash flows to parent, after-tax ($) 2023 12,000,000 47 52 57 Calculate the cash flows in U.S. dollars for years 2024 through 2026 below: (Round to the nearest whole number.) Net income (INR) Initial investment (INR) 2024 12,000,000 2025 12,000,000 2026 12,000,000 Calculate the cash flows in U.S. dollars for years 2024 through 2026 below: (Round to the nearest whole number.) Net income (INR) Initial investment (INR) Dividends received in the U.S. (INR) Sale value (INR) Net cash flows to parent, after-tax (INR) Expected exchange rate (INR/$) Net cash flows to parent, after-tax ($) 2024 12,000,000 2025 12,000,000 2026 12,000,000 100,000,000 62 62 67 72 The net present value on this investment from the parent's viewpoint is $ (Round to the nearest dollar.) The internal rate of return on this investment from the parent's viewpoint is ☐ %. (Round to two decimal places.) 1st o p Data table What is th (Click on the following icon in order to copy its contents into a spreadsheet.) Sales revenue Less cash operating expenses INR33,000,000 (16,000,000) INR17,000,000 Gross income Ow Less depreciation expenses 2) t (l ved Earnings before interest and taxes Less Indian taxes at 25% Net income Add back depreciation Annual cash flow op ng Print Done (1,000,000) INR16,000,000 (4,000,000) INR12,000,000 1,000,000 INR13,000,000 - ☑ Data table (Click on the following icon in order to copy its contents into a spreadsheet.) INR/$ INR/$ 2021 47 2024 62 2022 2023 534 52 2025 67 57 2026 72 Print Done ☑
Expert Answer:
Answer rating: 100% (QA)
Natural Mosaic Natural Mosaic Company US is considering investing INR50000000 in India to create a w... View the full answer
Related Book For
Fundamentals of Multinational Finance
ISBN: 978-0205989751
5th edition
Authors: Michael H. Moffett, Arthur I. Stonehill, David K. Eiteman
Posted Date:
Students also viewed these finance questions
-
Natural Mosaic Company (U.S.) is considering investing Rs50,000,000 in India to create a wholly owned tile manufacturing plant to export to the European market. After five years the subsidiary would...
-
Natural Mosaic Company (U.S.) is considering investing Rs50,000,000 in India to create a wholly owned tile manufacturing plant to export to the European market. After five years, the subsidiary would...
-
Copper Industries (a sole proprietorship) sold three 1231 assets during 2015. Data on these property dispositions are as follows: a. Determine the amount and the character of the recognized gain or...
-
Suppose that each firm that operates in an industry has a total cost curve given by TC = 7,000 + 50Q. In this industry, the lowest average total cost of producing 1,000 units of output occurs when:...
-
A division of Virginia City Highlands Manufacturing is considering purchasing for 1,500,000a machine that automates the process of inserting electronic components onto computer motherboards. The...
-
Choose a country from three of the regions presented in Table 6.7. Using the Internet, collect as much information as you believe is needed to identify the potential for market segments based on age,...
-
Hanson Inn is a 96-room hotel located near the airport and convention center in Louisville, Kentucky. When a convention or a special event is in town, Hanson increases its normal room rates and takes...
-
In some labor markets, the supply of labor is as follows (where W represents wages and L represents the number of employees): W = 113 + 0.21L However, the demand for labor is: W = 958 -0.28L a) At...
-
Suppose that Stock 1 s monthly log return is 4 0 % and that Stock 2 s monthly log return is 6 0 % . Your portfolio includes 7 0 % of Stock 1 and 3 0 % of Stock 2 . Please compute the following: ( a )...
-
For an economy with a tax rate of 15%, the following expenditure functions are given; C 150 +0.8YD G = 750 I = 520 NX = 100 -0.18Y a) Compute the multiplier and the equilibrium level of national...
-
A bullet has a speed of 350m/s as it leaves a rifle. If it is fired horizontally from a cliff 6.4m above a lake, how far does the bullet travel before striking the water?
-
Examine how technology can be utilized to improve instruction and assess learning in early childhood education. Explain
-
1. Explain China's economic rise as it is explained in the article ONLY . 2. Please explain the role of the US dollar as the global reserve currency as it is explained in the article ONLY . 3. Please...
-
22. The book value of a firm's total assets is $550,000. It has total liabilities of $300,000 and total stockholders' equity of $250,000. The debt-to-equity ratio is:
-
[A] 0.4 0.2 0.6 0.2 0.2 [B] 0.4 0.4 0.1 0.1 0.2 [C] 0.2 0.4 0.2 0.2 0.4 Initial Rate 160 80 15 5 20 What is the order of the reaction with respect to A?
-
Consider the combustion of methanol below. If 64 grams of methanol reacts with 160 grams of oxygen, what is the CHANGE in volume at STP. 2CH3OH(g) + 3O2(g) 2CO2(g) + 4H2O(1) The volume decreases by...
-
JPMorgan's Latin American Equity Research department produced the following WACC calculation for Petrobrs of Brazil versus Lukoil of Russia in their June 18, 2004, report. Evaluate the methodology...
-
Compass Rose, Ltd., a Canadian manufacturer of raincoats, does not selectively hedge its transaction exposure. Instead, if the date of the transaction is known with certainty, all foreign currency...
-
The Japanese yen-euro cross rate is one of the more significant currency values for global trade and commerce. The graph below shows this cross rate from when the euro was launched in January 1999...
-
In small groups, discuss the worst or most difficult interview questions you have ever received. Add to your list by searching the internet for weird or unusual questions. Review your list and...
-
Research a geographic area where you would like to work. Investigate the cost of living, industrial growth in the area, weather and climate, and attractions in the area you could visit. The local...
-
The required rate of return is 12%, and the expected rate of inflation over the life of the project is forecast to remain steady at 3%. Should you invest in this project?
Study smarter with the SolutionInn App