Problem 11-19 Economic rents Consider the following information given below: Year 1 Year 2 Year 3 Year 4 Year 5-10 Year 0 100 0 0 57 114 114 114 ($ in millions except as noted) Investment Production (millions of pounds per year) Spread ($ per pound) Net revenues Production costs Transport Other costs Cash flow NPV (at r - 15%) = -3.21 = 1.37 0 0 0 0 -100 1.37 0 0 0 37 -37 1.37 78 47 21 37 -26.91 ***** 1.37 156 47 10 37 62.18 1.37 156 47 10 37 62.18 1.12 128 47 10 37 33.68 Production and transport costs are variable costs while other costs are fixed. a. Calculate the NPV of the proposed polyzone project, if the spread in year 4 holds at $1.37 per pound and what's the right management decision? b. Calculate the NPV of the proposed polyzone project, if the U.S. chemical company can start up polyzone production at 57 million pounds in year 1 rather than year 2 and what's the right management decision? c. Calculate the NPV of the proposed polyzone project, if the U.S. company makes a technological advance that reduces its annual production costs to $42 million. Competitors' production costs do not change and what's the right management decision