Morgan Limited is a company based in South Africa. They are specialist who manufacture curtains. They are seeking to expand its operations, it has the opportunity to acquire a French subsidiary company, French Curtains Limited, or set up a new division in its home market. The relevant figures for these two options are: Set up new division at home Rand Cost of setting up premises 70 000 000 Cost of machinery 30 000 000 Annual sales 47 000 000 Annual variable cost 9 000 000 Additional head office expenses 1 000 000 Existing head office expenses 650 000 Depreciation (Included in annual sales calculation as an expense) 3 000 000 Acquisition Acquire shares from existing shareholders Annual sales Annual variable costs Annual fixed costs Consultant fees Euro 33 000 000 11 000 000 3 500 000 500 000 275 000 . Additional information: The project is expected to last for 10 years. Morgan Limited, current cost of capital is 16%. The French inflation is expected to be below the South African inflation by 3% per year, throughout the life of this investment The current exchange spot rate is R22 to the Euro (). Required: 1.1 Make all necessary calculations for the two options. 1.2 Advise Morgan Limited on the viability of these two opportunities. (22 marks)