A clothing manufacturer is setting up capacity in Spain and Poland for the next three years. Annual demand in each market is 1.5 million units and is likely to remain at that level. The two choices being considered by the company are to build 1.5 million units of capacity in each of the two locations. Building two plants will require a one-off cost of €3 million. The variable cost of production in Spain (for either a large or small plant) is currently€10/unit, whereas the cost in Poland is 8 Zolty/unit. The current exchange rate is 1 euro for 4.15 Polish Zloty. Over each of the next three years, the Zloty is expected to strength by 15 percent with a probability of 0.7 or weaken by 10 percent with a probability of 0.3. Assume a discount factor of 8 percent. What should the clothing manufacturer do? At what initial cost differential from building the two plants will the clothing manufacturer be indifferent between the two options?