Cash flow diagram for operation from company viewpoint

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Reference no: EM131775240

It is estimated that a steel manufacturer will produce 1,000 tons of steel during the coming year. Profit each year is expected to be $150 per ton, so that at the end of the first year the total profit will be $150,000. As a result of improvements in technology, production is expected to increase by 80 tons per year thereafter in each of the following five years (years 2 – 6).

a. Draw a cash flow diagram for this operation from the company’s viewpoint that shows the profit earned each year.

b. If the company can earn 7% per year on its capital, what is the future equivalent of the manufacturer’s cash flow at the end of year six?

Reference no: EM131775240

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