An air-conditioning manufacturer has spent $1,500,000 on developing a new ductless AC system. The estimated market size for the ductless AC systems is 26,000 units in 2020, and is expected to grow at an annual rate of 10% over the next 4 years. The firm predicts that with this new product, it will obtain a market share of 3% in 2020, 5% in 2021, 10% in 2022, and 15% in 2023. The variable cost of manufacturing each unit is $250. Assume that the firm expects all the costs to be paid off in 4 years.

Compute the cost-based price for this new system, if: a) target profit is $500,000 b) profit margin is 20%