17. Economic rents (S11.3) Reevaluate the NPV of the proposed polyzone project (Example 11.6)

under each of the following assumptions. What’s the right management decision in each case?

a. Spread in year 4 holds at $1.20 per pound.

b. The U.S. chemical company can start up polyzone production at 40 million pounds in year 1 rather than year 2.

c. The U.S. company makes a technological advance that reduces its annual production costs to $25 million. Competitors’ production costs do not change.