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A medium-size industrial chemical producer is considering a $5 million extension to its processing plant. The estimated service life of the extension is twelve years.

A medium-size industrial chemical producer is considering a $5 million extension to its processing plant. The estimated service life of the extension is twelve years. The selling price of the product being produced is $510 per ton. The engineers expect to produce and sell an additional 25,000 tons of material per year. The average processing cost is $435 per ton in the first year.Processing cost is expected to increase by $10 per ton every year. The market value of the extension is $4.5 million at the end of 12 years. Use the PW method with a MARR = 10% to determine if this extension is profitable.

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