Program Translation[1]

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 is 300,000 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?

[1] Based on 2-21, 2-35 and 2-45 (p. 62, 64 and 65) in Practical Management Science (4th ed., Winston and Albright, 2012 Duxbury Press).