Hurte$-$Paroxysm Products, Inc. $($B$).$ Hurte$-$Paroxysm Products, Inc. $($HP$)$ of the United States, exports computer printers to Brazil, whose currency, the reais $($BRL$)$ has been trading at BRL$3\mathrm{.}40/$USD $1\mathrm{.}00.$ Exports to Brazil are currently $50,000$ printers per year at the reais$-$equivalent of $$200$ each. A rumor exists that the reais will be devalued against the dollar to BRL$4\mathrm{.}00$ within two weeks by the Brazilian government. Should the devaluation take place, the reais is expected to remain unchanged for another decade.

Accepting this forecast as given, HP faces a pricing decision that must be made before any actual devaluation: HP may either $(1)$ maintain the same reais price and, in effect, sell for fewer dollars, in which case Brazilian volume will not change, or $(2)$ maintain the same dollar price, raise the reais price in Brazil to compensate for the devaluation, and experience a $20\%$ drop in volume. Direct costs in the United States are $60\%$ of the U$.$S$.$ sales price.

HP also believes that if it maintains the same price in Brazilian reais as a permanent policy, volume will increase at $10\%$ per annum through year six, costs will not change. At the end of six years, HP$\text{'}$s patent expires and it will no longer export to Brazil. After the reais is devalued to BRL$4\mathrm{.}00=$ USD$1\mathrm{.}00,$ no further devaluation is expected. If HP raises the price in reais so as to maintain its dollar price, volume will increase at only $4\%$ per annum through year six, starting from the lower initial base of $40,000$ units. Again, dollar costs will not change, and at the end of six years, HP will stop exporting to Brazil. HP$\text{'}$s weighted average cost of capital is $12\%.$ Given these considerations, what do you recommend for HP$\text{'}$s pricing policy? Justify your recommendation.

CASE $1$

If HP maintains the same reais price and in effect sells for fewer dollars, the annual sales price per unit is equal to $($$$200BRL\frac{3\mathrm{.}40}{\text{\$}})BRL\frac{4\mathrm{.}00}{\text{\$}}=$$$170.$ The direct cost per unit is $60\%$ of the sales, or $$2000\mathrm{.}60=$$$120.$ Calculate the gross profits for years $1$ through $6$ in the following table: $($Round to the nearest dollar.$)$

$\backslash$table$[[$Case $1,,$Year $1,$Year $2,$Year $3,$Year $4,$Year $5,,$Year $6],[$Sales volume $($units$),,50,000,,,,,,],[$Sales price per unit,$$,170,170$$$,170,170,170,0$$$,170],[$Total sales revenue$],[$Direct cost per unit,$$,120,120$$$,120,120,120,0$$$,120],[$Total direct costs$],[$Gross profits,,,,,,,,$]]$

If HP$\text{'}$s weighted average cost of capital is $12\%,$ what is the cumulative present value of the firm's gross margin?

$($Round to the nearest dollar.$)$

CASE $2$