Scenario:

Alpha Tile Co. (U.S.) is considering a capital expenditure of $9.5MM in India to create wholly owned tile manufacturing plant to export to the European market. After five years the subsidiary would be sold to Indian investors for INR1,000,000,000 above the value of the NWC tied up in the project. There will be no capital gains tax on the final sale. The assumptions is sales revenue will be €3.85MM next year, with sales growing 5% per year and 61% of sales required for cash operating expenses. There will be INR25,000,000 annual depreciation expenses. Initial Net Working Capital needs will be

INR8 million, and are expected to be 13% of sales for each subsequent year. Alpha typically uses a 14% cost of capital on domestic investments, and will add 6 percentage points for the Indian investment because of perceived greater risk. The initial investment will be made on December 31 of this year, and cash flows will occur on December 31st of each succeeding year. The Indian corporate tax rate is assumed to be 40%.

Assume the following projected exchange rates:

Year INR/$ Euro/$

1 58.38 0.7501

2 61.34 0.7643

3 64.13 0.7714

4 68.68 0.7848

5 70.98 0.7919

Build a spreadsheet to address the following scenarios. Provide readable, well-formatted printouts of your work.