USX is considering adding an additional furnace.$$ Feasibility study $($source of numbers$)$ cost $$1$ Million.$$ New Plant will produce $$50$ M in new sales annually.$$ Save $$100$M in yearly expenses.$$ Operating Costs: $$10$M per year.$$ Initial outlay of $$1000$M for furnace.$$ Furnace will use integral parts from an old furnace. Old furnace is fully depreciated, but has a resale value after taxes $($with parts$)$ of $$30$M today. Without the parts the old furnace has no value. The parts are no longer manufactured.$$ The new furnace is expected to have a salvage value of $$200$M at the end of $10$ years.$$ Working capital requirements will increase by $$20$M$.$ The government taxes corporations at $33\mathrm{.}3\%$ and requires the straight$-$line method of depreciation.$$ Opportunity cost of capital $($OCC$)$ is $10\%--$ ie$,$ investments of the same timing as this project $($and risk$)$ earn $10\%.$Q: Should USX purchase the furnace? How about if their OCC were $4\%?$ How much would the new furnace need to increase sales in order to get USX to buy it $($given OCC of $10\%)?$