GP LLC provides warranties at the point of sale to its buyers. In relation to the warranties, the manufacturer promises to repair or replace defects that become apparent within 10 years from the date of sale. Drawing on past experience, the manufacturer expects that 5% of goods sold require repair that costs 25% of sale price; 25% of goods sold require repair that costs 40% of sale price; and remaining 10% of goods sold require repair or replacement costing 100% of sale price. Besides, GP LLC anticipates that expenditures for warranties for goods sold in 2018 are going to be incurred 40% in 2019, 30% in 2020, and 30% in 2021 (at the end of year in each period). Discount rate is 5% per annum.

In 2018, the Company sold 100 million units of each Type a machinery with cost of 500 million USD at 20% gross profit, Type B machinery with cost of 400 million at 15% gross profit, and Type C machinery with cost of 800 million USD at 15% gross profit.

Required:

Determine the amount of warranty obligation that the manufacturer shall recognize for year 2018.