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Walmart, a U.S.-based MNC, has screened several targets. Based on economic and political considerations, your preferred acquisition is Flipkart. Walmart would like you to value this target and has provided you with the following information: Walmart expects to keep the target for three years, at which time it expects to sell the firm for 500 million Indian rupees (INR) after deducting the amount for any taxes paid. Walmart expects a strong Indian economy. Consequently, the estimates for revenues for the next year are INR300 million. Revenues are expected to increase by 9% over the following two years. Cost of goods sold are expected to be 60% of revenues. Selling and administrative expenses are expected to be INR40 million in each of the next three years. The Indian tax rate on the target's earnings is expected to be 30%. Depreciation expenses are expected to be INR15 million per year for each of the next three years. The target will need INR9 million in cash each year to support existing operations. The target's current stock price is INR35 per share. The target has 11 million shares outstanding. Any cash flows remaining after taxes are remitted by the target to Walmart. Walmart uses the prevailing exchange rate of the Indian rupee as the expected exchange rate for the next three years. This exchange rate is currently $0.23. Walmart's required rate of return on similar projects is 13%. Flipkarts board has indicated that it finds a premium of 30 percent appropriate. You have been asked to negotiate for Walmart with Flipkart. As youre assessing country risk factors, youve identified several potential challenges to your model. Specifically, youve identified some upside or risk associated with wage inflation and operational efficiencies, as well as exchange rate risk dependent on the strength of Indias economy relative to the United States. Further, theres a chance that the ruling party is swept out of office by a more protectionist party, which has promised to institute a withholding tax for remittances to the United States. The tables below reflect the findings of your research:

The Indian Rupee experiences an average % change in value relative to the USD per year Likelihood of occurrence The cost of goods sold as a % of sales changes from 60% in Year 1 by this amount per year Likelihood of occurrence -2% 25% 1% decline from PY 25% 0% 40% No change from PY 40% 1% 35% 2% increase from PY 35% The withholding tax applied on earnings remitted from India to the United States Likelihood of occurrence 0% 80% 10% 20% Based on the above inputs and scenarios, please provide the following: Create a model budget for this assessment in Excel on one tab (use of variable cells strongly encouraged). Please leave all formulas intact & document your logic. Assuming that all of the above scenarios are independent of each other, create a table summarizing the present value for each outcome (without factoring in any capitol outlay). You should have 18 scenarios to map, so the table should be 18 x 3. Given the above, determine the weighted average value for this project. Using that average net present value, determine the maximum percentage premium you should be willing to offer on Flipkarts stock. Given the above, is a 30% premium on the value of their shares a reasonable position for Flipkart to take?

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