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A chemical manufacturer is setting up capacity in Europe and North America for the next 3 years. Annual demand in each market is 2 million
A chemical manufacturer is setting up capacity in Europe and North America for the next years. Annual demand in each market is million kilograms kg and is likely to stay at that level. The two choices under consideration are building million units of capacity in North America and building million units of capacity in each of the two locations. Building two plants will incur an additional onetime cost of $ million. The variable cost of production in North America for either a large or a small plant is currently $kg while the cost in Europe is $kg The current exchange rate is euro for US$ Over each of the next three years, the dollar is expected to strengthen by with a probability of or weaken by with a probability of Assume a discount factor of
What is the NPV value associated with building a million units of capacity in North America?
What is the NPV value associated with building a building million units of capacity in each of the two locations North America and Europe
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