18.2 Finisterra, S.A. Finisterra, S.A., located in the state of Baja California, Mexico, manufactures frozen Mexi- can food, which enjoys a large following in the U.S. states of California and Arizona to the north. In order to be closer to its U.S. market, Finisterra is consider- ing moving some of its manufacturing operations to southern California. Operations in California would begin in year 1 and have the following attributes. Assumptions Value Sales price per unit, year 1 (US$) $5.00 Sales price increase, per year 3.00% Initial sales volume, year 1, units 1,000,000 Sales volume increase, per year 10.00% Production costs per unit, year 1 $ 4.00 Production cost per unit increase, per year 4.00% General and administrative expenses, $100,000 per year Depreciation expenses, per year $ 80,000 Finisterra's WACC (pesos) 16.00% Assumptions Terminal value discount rate Spot exchange rate (Ps/$) Year 0 Spot exchange rate (Ps/$) Year 1 Spot exchange rate (Ps/$) Year 2 Spot exchange rate (Ps/$) Year 3 Value 20.00% 8.00 9.00 10.00 11.00 The operations in California will pay 80% of their accounting profit to Finisterra as an annual cash dividend. Mexican taxes are calculated on grossed- up dividends from foreign countries, with a credit for host-country taxes already paid. What is the maxi- mum U.S. dollar price Finisterra should offer in year 1 for the investment