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Sugar Baby Corp. (SBC) is considering whether to build a refinery in the U.S. state of Georgia to serve its North American market. SBC is
Sugar Baby Corp. (SBC) is considering whether to build a refinery in the U.S. state of Georgia to serve its North American market. SBC is based in the UK and processes raw sugar into premium gourmet sugar. Currently, SBC exports 100,000kg of sugar per year to its North American customers and realizes a contribution margin of GBP 3 per kg sold. SBC is certain that the new refinery in the U.S. would meet all the current demand in North America and sales volume would likely increase. SBC does not foresee it will be able to sell any of the amount currently exported to North America once the new refinery is operational. SBC estimates that it could sell 390,000kg of sugar in North America during the first year of operations, and sales volume would grow at 5% annually. SBC plans to price its product at USD 7.70 per kg. Total operating costs are expected to be USD 3.30 per kg. Both the sales price and operating costs are expected to keep pace with the U.S. inflation rate forecast of 3% per annum for the next 3 years. The UK inflation rate is estimated at 4.5% per annum for the next 3
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