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As a chief engineer, you need to come up with the cash flow estimate for a newly proposed production line. Initially, the system is designed
As a chief engineer, you need to come up with the cash flow estimate for a newly proposed production line. Initially, the system is designed to have a maximum capacity
of six million parts to produce per year, but the demand is expected to grow at an annual compound rate of Whenever the annual demand reaches of the
maximum designed capacity, the maximum designed capacity must be doubled in the subsequent year. Assume when the maximum designed capacity needs to be
changed it will be built from scratch. The cost of meeting these future demands, as well as other projected financial data, are as follows:
Cost of building the production system as a function of maximum designed capacity:
Initial demand million parts per year.
Demand growth rate per year.
Project life years.
Revenues per year demand during year
Expenses per year $ demand during year
Estimate the project cash flows over the project life.
Fill in the table below. Round to the nearest dollar.
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