Question: AssumptionProbably for High Average Demand: Ph = 6 0 % ; for low average demand : PL = 4 0 % Big Plant ( 1

AssumptionProbably for High Average Demand: Ph =60%; for low average demand : PL =40%Big Plant (1A): a. High Demand yields $1,000,000 annually in cash flowb. Low Demand yields $100,000 annually (due to high cost)Small Plant (1B): initial high demand: h. $450,000 yr for year 1& 2(2 years) Expanded: c. High Demand, $700,000(from yr 3 to 10) for 8 yearsd. Low Average Demand: $50,000 for 8 years (low efficiency) No Change:e: High Demand: $300,000 for 8 years (competition)f. Low Demand: $400,000 for 8 yearsSmall Plant with initial low demand:g: $400,000 for 10 yearsInvestment Cost: A (large plant): 3,000,000; B (small plant): 1,300,000; C(expansion): 2,200,000
 AssumptionProbably for High Average Demand: Ph =60%; for low average demand

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