The Chairs Problem

Jeremy Davis and his colleague Bob Hawkins are starting a new business, making deck chairs and$/$or

recliners. They have estimated the values of a number of important quantities relevant to their

enterprise; they are given below. We'll be investigating what happens when we change some of these

parameters.

Original Assumptions

Use these values in creating your original model.

In the initial outlay, Jeremy and Bob will buy the building and property that they will use as their factory

at a cost $$4,000,000.$ Additional equipment and facilities must be installed at that time, and those will

cost them an additional $$1,800,000.$ In ongoing expenses, they anticipate $$96,000$ a year for other fixed

expenses: insurance, taxes, utilities, etc.

The materials, labor, and other costs associated with making and selling a deck chair come to $$18$ per

chair, and these chairs can be sold for $$30$ each. A recliner costs $$23$ to make but sells for $$45.$ We

assume that Davis and Hawkins can sell all of the furniture that they produce. They are considering their

finances in terms of a multi$-$year time horizon, and originally choose a $10-$year time horizon. Fhat is$,$

they are considering how much money they would make $($or lose$)$ over a $10-$year period.

Davis and Hawkins currently plan on making and selling $36,000$ deck chairs and $23,400$ recliners each

year.

Tasks

In Excel, create a model of Jeremy and Bob's situation. Specifically:

Each of the $10$ numbers appearing in the Original Assumptions above should have its own cell in the