Liston, Inc., owns a factory located close to, but not inside, a foreign trade zone. The plant imports volatile chemicals that are used in the manufacture of chemical reagents for laboratories. Each year, Liston imports about $16,400,000 of chemicals subject to a 30% tariff when shipped into the United States. About 15% of the imported chemicals are lost through evaporation during the manufacturing process. In addition, Liston has a carrying cost of 8% per year associated with the duty payment. On average, the chemicals are held in inventory for 9 months.

1. How much duty is paid annually by Liston? $

2. What is the carrying cost associated with the payment of duty? $