In evaluating the proposal to set up the new local fividivision in Cape town $,$ zantrix ltLtd would incur san initial capital outlay of $25,000,000$ for setting up the epremisepremises and $18,000,000$ for scacquiring machinery. Depreciation is $10$ percent using the straight line method. this division is expected to generate annual sales of R$11,000,000,$ against which it will incur variable costs of R$4\mathrm{.}200\mathrm{.}000$ and additional head office expenses of $950\mathrm{.}000.$ the operation will also continue to bear R$400,000$ in existing head of expenses

For the propeproper acquisition of the polish manufacturing subsidiary, zantrix ltLtd would incur an initial investment of $9,000,000$ to aquiracquire shares from existing shareholders. in addition redundancy costs amounting to $2,700,000$ would be required upfront. Furthermore, as partopart of the initial research,bconsuntant' fees of $4,900,000$ were paid the project is expected to generate annual sales of $16,000,000.$ from the company anticipates incurring variable costs of $8,400,000$ and anuaannual fixed costs of $3,200,000-$ the latter includes depreciation expenses of $800,000.$

Additional information:

project life: $10$ years

zantrix ltLtd cost of capital:$13$ percent

polish inflation is expected to be $2$ percent below soutSouth africaAfrican inflation throughout the project

exchange rate: $1=$ R$20$

Required

$4\mathrm{.}1$ perform all necessary calculations to assess the financial viability of each option.

$4\mathrm{.}2$ Advise zantrix ltLtd which option if any to pursue, based on your findings