-46f14901d14de26c1bbf6108b8c24c4 1 / 2 BFF2341 Mini Test 2 (Written Part) Date: 29th January 2021 (**MCQ part in moodle) PART A: Financial Problems. All Questions are compulsory unless specified. Question 1: Multinational Capital Budgeting (Compulsory Question) (15 Marks) Destiny Industries, a company based in Australia, has planned to expand its business in Thailand by investing in a new project. The following information has been gathered to assess this project: . "The initial investment required is Thai Baht (THB) 60 million. Thisinvestment outlay will be depreciated on a straight-line basis over its useful life. The project will be terminated at the end of Year 3 when the subsidiary will be sold. The Thailand government charges a corporate tax of 35% on profit. In addition, in year 3. there will be withholding tax (remittance tax) of 5% on all profit remitted by the subsidiary to the parent. All cash flows received by the subsidiary are sent to the parent at the end of each year, In three years' time, the subsidiary is to be sold for THB 20 million. Assume that this amount is not subject to any tax Thai bath continues to depreciate by 5% each year. You will need to calculate the rates for your analysis. Destiny Industries requires a 15% per annum rate of return on this project. You have been given the following additional information: . . Year Exchange rate THI/AS (forecast) Product cost and revenue information Variable costs Price per unit Sales (No. of unit) per unit CTH) CTHB) Other cash expenses 0 1 1 SAUD 30 THB 1 SAUDY? THE 1 SAUDITH 250,000 10% more than previous year 2 75.0 10% more than previous year 2.250.000 3,000,000 150.0 10% more thais previous year 10 more than previous year 1 SAUD? THR 20% more than previous year 15% more than previous year 4.500,000 17 Hequired: Calculate the net procent value (NPV) of the project in AUD, and determine whether Destiny Industries should undertake this project, Show all relevant formulas antul calculations to get Zoom (2) pkg Show All