show all the steps and calculations

ON 3 (25 Marks) Eshowe (Ltd), South Africa, is a specialist manufacturer of automobile components. In seeking to expand its operations has the opportunity to acquire a German subsidiary company. Munich Ltd. or set up a new division in its home marke The relevant figures for these two options are: Rand Set up new division at home Cost of setting up premises Cost of machinery 29 000 000 Annual sales 18 000 000 Annual variable cost 25 000 000 Additional head office expenses 7 000 000 Existing head office expenses 1 000 000 Depreciation 900 000 4 700 000 Acquisition Acquire shares from existing shareholders Euro Annual sales 13 000 000 8 000 000 Annual variable costs 4 000 000 Annual fixed costs 1 000 000 Consultant fees 800 000 Additional information: - The project is expected to last for 10 years. - Eshowe (Ltd), current cost of capital is 12%. - The German inflation is expected to be below the South African inflation by 1% per year, throughout the life of this investment. - The current exchange spot rate is R15.50 to the Euro (). Required: 3.1 Make all necessary calculations for the two options. 3.2 Advise Eshowe (Ltd) on the viability of these two opportunities. (22 marks)