Answer all questions and show calculations: 1) Blore Inc., a U.S.-based MNC, has screened several targets. Based on economic and political considerations, only one eligible target remains in Malaysia. Blore would like you to value this target and has provided you with the following information: Blore expects to keep the target for three years, at which time it expects to sell the firm for 300 million Malaysian ringgit (MYR) after any taxes. Blore expects a strong Malaysian economy. The estimates for revenue for the next year are MYR200 million. Revenues are expected to increase by 8% in each of the following two years. Cost of goods sold is expected to be 50% of revenue. Selling and administrative expenses are expected to be MYR30 million in each of the next three years. The Malaysian tax rate on the target's earnings is expected to be 35 percent. Depreciation expenses are expected to be MYR20 million per year for each of the next three years. The target will need MYR7 million in cash each year to support existing operations. The target's stock price is currently MYR30 per share. The target has 9 million shares outstanding. Any remaining cash flows will be remitted by the target to Blore Inc. Blore uses the prevailing exchange rate of the Malaysian ringgit as the expected exchange rate for the next three years. This exchange rate is currently $.25. Blore's required rate of return on similar projects is 20 percent. SET OUT YOUR WORKSHEET TO SHOW HOW THE PROJECT IS VALUED, Valuation of Malaysian Target Based on the Assumptions Provided (numbers are in millions) Year 1 Year 2 Year 3 Revenue Cost of Goods Sold Gross Profit MYR200 MYR100 MYR100 Selling & Admin. Exp. Depreciation Earnings Before Taxes MYR30 MYR20 MYR50 Tax (35%) Earnings After Taxes MYR17.5 MYR32.5 +Depreciation -Funds to Reinvest MYR20 MYR7 Sale of Firm MYR300 Cash Flows in MYR Exchange Rate of MYR Cash Flows in S MYR45.5 $.25 $11.4 $.25 $.25 PV (20% disc. rate) Cumulative PV $9.5 $9.5 A) What is the present value of the Malaysian target: a) $79.9 b) $89.9 c) $69.9 d) $59.8 e) $68.9 B) What would the Cumulative PV be if targets sale value in three years is 500 million Malaysian ringgit (MYR) after any taxes? C) What would the Cumulative PV be if discount rate was 10%? D) Given the original assumptions will Blore Inc. be able to acquire the Malaysian target for a price lower than its valuation of the target