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3. A major drug company is trying to determine the correct plant capacity for a new drug. A unit of annual capacity can be
3. A major drug company is trying to determine the correct plant capacity for a new drug. A unit of annual capacity can be built for a cost of $10. Each unit of the drug sells for $12 and incurs variable costs of $2. The drug will be sold for 10 years. Develop a worksheet that computes the company's 10-year profit given the chosen annual capacity level and the annual demand for the drug. Assume demand for the drug is the same each year. You can ignore the time value of money in this problem. Alignme A1 X fx ='Chapter 12 Q3'! A B D E 1 annual demand 4000 2 annual capacity level 3500 3 unit build cost 4 unit price 5 unit prod cost 555 $ 10.00 $ 12.00 $ 2.00 6 7 build cost 8 ten year revenue 9 ten year var cost 10 profit 11 12 13 14 15 LE
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