Homespun-A Linen Sdn Bhd. exports 75,000 high quality carpet and table mat sets per year to Israel under a trade license that expires in five years. In Israel the imported carpet and table mat sets are sold for the Israeli shekel equivalent of RM80 per set. Direct manufacturing costs in Malaysia together amount to RM40 per set inclusive of RM30 for material cost and the remaining attributed to shipping costs. The market for import items such as carpets and table mats are growing in Israel. Thus, in order to cater to the increasing demand in the home market, the Israeli government has invited HomespunA Linen to open a manufacturing plant by 31 December 2021. If Homespun-A Linen makes this investment, it will operate the plant for five years and then sell the plant to Israeli investors. The management of Homespun-A linen has estimated that the fixed assets will be depreciated over five years by the straight-line method and an additional capital requirement of RM1,000,000 has to be arranged for this plant. Homespun-A will be allowed to repatriate all funds to Malaysia each year. Homespun-A Linen evaluates all foreign investments in Malaysian Ringgit (MYR) terms. The corporate tax rate applicable for the Israel market is 40% and the Malaysian market is higher by 5%. You are expected to evaluate the proposed investment in Israel by Homespun-A Linen Sdn Bhd. Homespun-As management wishes to explore the implications of being able to grow exports by 4% per year. Inflation in Israel is expected to average 5% per year, so sales price and material cost increases by 6% and 5% per year, respectively, are thought reasonable. In addition to the rising material costs in Israel, other export and import related costs are expected to increase by 1.25% over the 5-year period. Homespun-As management wishes the baseline analysis to be performed in MYR. Carpet export volume to Israel, per year 75,000 Sales price per set in Israel RM80.00 Material import cost per set RM30.00 Shipping import cost per set RM10.00 Direct & indirect export cost per set RM5.00 Building and Equipment RM 1,000,000 Initial investment RM 6,000,000 Discount rate in Israel 15.00% Required: (a) Evaluate this scenario for both the viewpoints by determining whether Homespun-A Sdn Bhd should undertake the proposed investment in the Israel, showing all calculations. (30 Marks) (b) In deciding to invest in Israel, Homespun-A Sdn Bhd must determine if it has a sustainable competitive advantage. Briefly discuss any FOUR (4) necessary characteristics of this competitive advantage. (10 Marks) (Total: 40 Marks)