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3. How would you describe the capacity of the processing network if the current Capital Appropriation Request capacity proposal was to be implemented? What is

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3. How would you describe the "capacity of the processing network" if the current Capital Appropriation Request capacity proposal was to be implemented? What is the expected profit and ROI under this investment? (Given the short product life, assume the firm is making its decisions for a single time period of length one year , at the end of which manufacturing capacity will have zero salvage value ) If the current Capital Appropriation Request were to be implemented, the capacity for the Cheetah and Barracuda drives would be as Fixed Cost Cheetah Barracuda Test Total per the expected demand. The following table demonstrates the cost break- up in this scenarioX Capacity (x1000 ) NA 300 300 600 600 Capacity Cost (M$) 40 48 103 The expected profit in this scenario has been calculated based on contribution margins for Cheetah and Barracuda drives at 400 $ and 300 $ respectively, the probabilit profitability C B cost of production M$) estimated at 690$ and 650 $ respectively (based on sales price of 1090 $ and 950 $ respectively), while the salvage value assumed to be zero. X Optimistic Scenario 0.25 450 250 19.6 Most Likely 0.5 300 300 107.0 Scenario

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