XYZ Manufacturing decides to build a new plant. The plant will cost $2 million immediately and is expected to have a useful life of 20 years. At the end of year 5, 10 and 15, there will be major renovation expenses of $K each time. The plant will produce level returns of $250,000 at the end of each year for the first 10 years and $500,000 at the end of each year for the second 10 years. Find the maximum value of K that XYZ could pay so that the internal rate of return on its investment is at least 12%.
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