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Business, 29.03.2021 23:10 justinb0829

A manufacturer wishes to make and sell 1.1 million units per year of an aviation part for 12 years with interest fixed at 14% per year. Option A is to build a manufacturing plant in the United States at a cost of $7 million, with endof-year expenses of $2 million per year. In order to meet environmental regulations, the manufacturer will need to invest $0.5 million for pollution control at the end of the fifth year. Option B is to build a manufacturing plant in Mexico for $4 million, with annual end-of-year expenses of $1.2 million. There will be a duty charge of 30% of the selling price in the United States. Find the aviation part selling price in the United States, at which the two options are equal.

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