XYZ Corporation, an Australian based carmaker, is considerng an expansion into Asia after its expansion into the US last summer was highly successful. Currently, XYZ does export cars to Asia, but the increased demand raises the question of an expansion in car Asia. XYZ is trying to decide whether to establish a car manufacturing plant and office m Japan where cars would be built and then sold across Asia. All relevant data is given in the tables below. The cost of the expansion is Yen 35,000,000 S0,000,000, which must be immediately expended. Three-year EBITDA are 45,000,000 and 55,000,000 respectively. Moreover, XYZ would have to fund additional working capital of Yen 5,000,000 at the time of the expansion. Further investment in net working capital would be Yen 5,000,000, Yen 8,000,000, and Yen 10,000,000 im year 1,2 and 3 respectively. If it builds the plant, XYZ will depreciate it at a rate of Yen 4,000,000 per year (starting im year 1) and will have to fund additional capital expenditures of Yen 8,000,000 per year to maintain and improve the plant. Although the project is assumed to have an infinite life, cash-flows are only projected up to three years and the terminal value the year 3 free cash-flow (FCF) assuming a growth of the project is computed based on rate that equals the Japanese long-rum GDP growth rate. All taxes are paid Japan in the year the income is eamed. Tax treaties are in effect so that XYZ will have no tax :obligations to the Australian Tax Office (ATO). The following information applies to the valuation. Japan Australia Price Inflation 2.00% 3.00% 3.00% 4.00% Annual retum on govemment bonds 40.00% 30.00% Corporate tax rate Equity market risk premium AUD 6.00% Spot rate-S(AUD/Ye 0.01 Before tax cost of debt 5.00% Debt-to-value ratio (DV) 0.5 Systematic risk (beta) Japanese long-rum GDP growth rate 1.2 3% WACC 12.80% C) Calcul ate the Free of Cash Flows of the project in Yen from year 1 to year 3 (7 marks) D) What is the terminal value as ofyear 3? Use a perpetuity formula, the Free Cash Flows in Yen for year 3, and the Japanese growth rate assumption given in the question. Assume the appropriate discount rate is WACC (3 marks) E) Calculate the AUD value of FCF for the years 0, 1,2 and 3 and the terminal value usimg the forward rates calculated in (b) (5marks) F) What is the NPV of the project from XYZ's perceptive (m AUD)? Should XYz expand into the Asian market