Question $1(25$ Marks$)$ Apple Limited, South Africa, is a specialist manufacturer of security doors and gates. In seeking to expand its operations, it could acquire a Dutch subsidiary company, Purple Guard, or set up a new division in its home market. The relevant figures for these two options are: Set up new division at home Rand Cost of setting up premises $35000000$ Cost of machinery $18000000$ Annual sales $41500000$ Annual variable cost $13000000$ Head office expenses $6000000$ o The Head office expense includes existing head office expense of R $1500000$ Depreciation: machinery $10\%$ on cost annually $1800000$ Acquisition Euro Acquire shares from existing shareholders $15000000$ Redundancy costs $6000000$ Annual Sales $32000000$ Annual variable costs $16000000$ Annual fixed costs $6000000$ Consultants fees $5000500$ Additional information: The project is expected to last for $10$ years. Apple Limited, current cost of capital is $13\%.$ The Dutch inflation is expected to be below the South African inflation by $2\%$ per year, throughout the life of this investment. The current exchange spot rate is R$20$ to the Euro $().$ Required: $1\mathrm{.}1$ Make all necessary calculations for the two options and advise Apple Limited on the viability of these two opportunities. $(25$ Marks$)$