Question

A software company is considering translating its program into French. Each unit of the program sells for $50 and incurs a variable cost of $10 to produce. Currently, the size of the market for the product is300,000 units per year, and the English version of the software has a 30% share of the market,. The company estimates that the market size will grow by 10% a year for the next five years, and at 5% per year after that. It will cost the company $6 million to create a French version of the program. The translation will increase its market share to 40%. Given a 10-year planning horizon, for what discount rates is it profitable to create the French version of the software?

Answer #1

Third degree price discrimination
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