Noble Robotics Company $($a U$.$S$.-$based firm$)$ exports $25,000$ industrial robots per year to China under an agreement that covers a $5-$year period. In China, the robots are sold for the RMB $($Chinese currency$)$ equivalent of $$50$ per unit. The total costs in the United States are direct manufacturing costs and shipping costs, which amount to $$35$ per unit. The market for industrial robots in China is stable, and Noble holds the major portion of the market.

In $2020,$ the Chinese government, adopting a policy of replacing imported robots with local products, invited Noble to open an assembly plant in China. If Noble makes the investment, it will operate the plant for $5$ years and then sell the building and equipment to Chinese investors at net book value $($cost less accumulated depreciation$)$ at the time of sale plus the current amount of any working capital. Noble will be allowed to repatriate $100\%$ of cash flow from operations $($net income plus depreciation$)$ to the United States each year.

Noble$$s anticipated outlay in $2020$ would be $$1,500,000($buildings and equipment, $$750,000,$ and working capital, $$750,000).$ Buildings and equipment will be depreciated over $5$ years on a straight$-$line basis $($no salvage value$).$ At the end of the fifth year, the $$750,000$ of working capital may be repatriated to the United States.