Superoot Company is a soft drink manufacturer in Malaysia that is considering setting up a manufacturing operation in Me

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Superoot Company is a soft drink manufacturer in Malaysia thatis considering setting up a manufacturing operation in Melbourne,Australia to be called Superoot Australia. The operationalset-up costs would be A$240,000, which would be depreciated forAustralian tax purposes on a straight line basis over threeyears. Superoot Australia would begin production in 2014.
The following estimates have been made:
(a) Production andsales would be 1 million bottles for 2014 and would remainunchanged through 2015 and 2016.
(b) The 2014 salesprice in Australia would be A$5.00 per bottle and would remainfixed through the next three years.
(c) Production costsare estimated at A$4.00 per bottle through the next threeyears.
(d) General andadministration expenses would be A$100 000 per year.
(e) All production isfor sale (production volume equals sales volume) and all sales arefor cash.
(f) Superoot Australiawill remit (return) 100.0% of its reported profits each period backto the parent company as an annual cash dividend.
(g) The corporate taxrate in Australia is 30%; Malaysia is 25%.
Actual and expected exchange rates, by year, are:
2013: RM2.80/A$
2014: RM3.00/A$
2015: RM3.00/A$
2016: RM3.00/A$
Superoot Company has assigned a weighted average cost of capitalof 16.0% to the project. In assessing the attractiveness of theAustralian venture, Superoot Company will assign an after-tax valueto its Australian plant at the end of 2016 equal to an infinitestream of remittances each assumed to be the same as its estimated2016 remittance, discounted at 20% per annum. The higher discountrate is because the company is concerned about the political riskof a Malaysian firm manufacturing in Australia.
Required:
Calculate the Malaysian ringgit value to Superoot Company of itsintended Australian operation as above at the end of 2013. Is theproject viable?