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A firm contracts and buys its computer hard drives from East Asia and uses several independent suppliers having an extensive and qualified manufacturing base. The

A firm contracts and buys its computer hard drives from East Asia and uses several independent suppliers having an extensive and qualified manufacturing base. The firm contracts for 40 million units per year. Engineering design and manufacturing liaison are conducted from the United States. Preliminary cost estimating is guided by a product index developed for computer hard drives and is given for two periods as follows:

Year Index
1 800
6 4000

A 80.43-GB 7200-RPM hard drive costs $150 for 100 units to this firm in year 3. What is the preliminary cost of a similar but slightly better performing drive, which assembles the contents of the product cost index, in year 8?

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