Rococo, Inc. France (B). Assume the same facts as in Problem 9. Rococo also believes that if it maintains the same price in Turkish lira as a permanent policy, volume will increase at 10% per annum for six years, and costs will not change. At the end of six years, Rococo’s patent expires and it will no longer export to Turkey. After the lira is devalued to TRY3.2/€, no further devaluation is expected. If Rococo raises the price in lira so as to maintain its euro price, volume will increase at only 4% per annum for six years, starting from the lower initial base of 32,000 units.

Again, euro costs will not change, and at the end of six years, Rococo will stop exporting to Turkey. Rococo’s weighted average cost of capital is 12%. Given these considerations, what do you recommend for Rococo’s pricing policy? Justify your recommendation.