A semi-conductor manufacturing plant capable of producing 1,000 chips per day cost $66,000,000.00 to build at the
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A semi-conductor manufacturing plant capable of producing 1,000 chips per day cost $66,000,000.00 to build at the end of 2009. A new, similar plant that can produce 2,000 chips per day is to be built by the end of 2018. The year to year cost escalation is given as 3% per year for the years 2010 through the end of 2013. For the years 2014 and 2015 the cost escalation is 1.5%. The cost escalation for years 2016 - 2018 are 0.5% Because the larger plant needs everything duplicated, the correlation coefficient for this type of plant is 0.9. What is your estimate of the plant cost?
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