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Carlyle Chemicals is evaluating a new chemical compound used in the manufacture of a wide range of consumer products. The firm is concerned that inflation

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Carlyle Chemicals is evaluating a new chemical compound used in the manufacture of a wide range of consumer products. The firm is concerned that inflation in the cost of raw materials will have an adverse effect on the projects cash flows. Specifically, the firm expects the cost pet unit (which is currently $0.86) will rise at a rate of 12 percent annually over the next three years. The per-unit selling puce is currently $0.98 and this price is expected to rise at a meager 1 percent annual rate over the next three years. If Carlyle expects to sell 6.5, 7.2, and 10 million units for the next three years respectively, what is your estimate of the gross profits to the firm? Based on these estimates, what recommendation would you offer to the firm's management with regard to this product

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