Project Involve setting up an independent manufacturing facility in Taiwan. The cost of the facility would be
Question:
Project
Involve setting up an independent manufacturing facility in Taiwan. The cost of the facility would be an initial outlay 2 800 000 Taiwan dollars. This would result in: annual profit 500 000 Taiwan dollars, for the 5 years of the project. The annual fixed costs variable costs are 90 000 and 80 000 Taiwan dollars respectively. These costs were not included in the profit calculation calculation. Consultant fees of R40 000 Taiwan dollars were included in the calculation of profit for Project B
Note:
Batman Traders Limited current costs of capital is 11 percent
The Taiwanese inflation is expected to exceed the South African inflation by 2 percent p.a throughout the life of the project.
The current spot rate exchange is 2.5 Taiwan dollars to the Rand.
Required.
Compute the necessary calculations and advise Batman Traders Limited it is worth investing in either, in one of both of these two opportunities.
Expert Answer:
Project A Initial investment 2800000 Taiwan dollars Annual profit 500000 Taiwan dollars Annual fixed ... View the full answer
