MMM Inc. (an Australian company), is considering building a plant in UK to expand its export market. The plan would cost 100mil to build and will produce cash flows of 20mil, 25mil, 30mil, $35mil, in years 1, 2, 3, and 4, respectively. The investment is risk-free. Other information is:

UK interest rate: 1.5%

Aus interest rate: 1.2%

Spot rate: 0.53/$A

a) Determine the NPV for the project in AUD using the local currency (Pound) approach.

b) Determine the NPV for the project in AUD using the period-by-period conversion approach.