XYZ Ltd. a Kenyan firm owns a subsidiary in Uganda. The subsidiary has an investment opportunity, which will cost USh. 400 million. XYZ plans to invest directly Ush. 250 million while the subsidiary will use Ush. 100 million.of its retained earnings and Ush. 50 million of locally borrowed funds at 10% interest. The project will generate revenue of Ush. 125 million in real terms annually for the next three years. The subsidiary wi!l import components from XYZ Ltd with a contribution of Ush. 20 million per year. The salvage value at the end of three years is estimated to be Ush. 50 million while the inflation rate is expected to be 5% in Kenya and (10% in Ugand. The nominal discount rate applicable to XYZ Itd is 14%. The spot exchange rate is(Ush, 30 per Ksh.1 while the corporate tax rate in Uganda is 30%. future exchange rate and straight line depreciation method. Assume that XYZ Ltd. uses purchasing power parity theorem to estimate Using the NPV method advice XYZ Ltd. on whether to undertake the project. (19 marks) XYZ Ltd. a Kenyan firm owns a subsidiary in Uganda. The subsidiary has an investment opportunity, which will cost USh. 400 million. XYZ plans to invest directly Ush. 250 million while the subsidiary will use Ush. 100 million.of its retained earnings and Ush. 50 million of locally borrowed funds at 10% interest. The project will generate revenue of Ush. 125 million in real terms annually for the next three years. The subsidiary wi!l import components from XYZ Ltd with a contribution of Ush. 20 million per year. The salvage value at the end of three years is estimated to be Ush. 50 million while the inflation rate is expected to be 5% in Kenya and (10% in Ugand. The nominal discount rate applicable to XYZ Itd is 14%. The spot exchange rate is(Ush, 30 per Ksh.1 while the corporate tax rate in Uganda is 30%. future exchange rate and straight line depreciation method. Assume that XYZ Ltd. uses purchasing power parity theorem to estimate Using the NPV method advice XYZ Ltd. on whether to undertake the project. (19 marks)