Consider the following information:

a-1. Calculate the NPV of the proposed polyzone project, if the spread in year 4 holds at $1.25 per pound.

b-1. Calculate the NPV of the proposed polyzone project, if the U.S. chemical company can start up polyzone production at 45 million pounds in year 1 rather than year 2.

c-1. Calculate the NPV of the proposed polyzone project, if the U.S. company makes a technological advance that reduces its annual production costs to $30 million. Competitors production costs do not change.

Year 1 Year 2 Year 3 Year 4Year 5-10 Year 0 100 (S in millions except as noted) Investment Required rate of return Production (millions of pounds per year) Spread ($ per pound) Production costs Transport Other costs 5% 90 1.25 90 1.15 0 1.25 0 0 0 1.25 0 0 1.25 1.00 10 10 10 Production and transport costs are variable costs while other costs are fixed