As a Chief engineer, you need to come up with the cash flow estimate for a newly proposed
production line. Initially, the system is designed to have a maximum capacity (Cmax) of six
million parts to produce per year, but the demand is expected to grow at an annual compound
rate of 10%. Whenever the annual demand reaches 80% of the maximum designed capacity,
the maximum designed capacity must be doubled in the subsequent year. The cost of meeting
these future demands, as well as other projected financial data, are as follows:
 Cost of building the production system as a function of maximum designed capacity:
1.5M + 0.5 (Cmax)
0.7
.
 Initial demand = 3 million parts per year.