What is the optimal number of year between new plant opening

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Question: A Japanese steel manufacturer is considering expanding operations. From experience, it estimates that new capacity additions obey the law

f(y) = .00345y^.51

where the cost f( y) is measured in millions of dollars and y is measured in tons of steel produced. If the demand for steel is assumed to grow at the constant rate of 8,000 tons per year and future costs are discounted using a 10 percent discount rate, what is the optimal number of years between new plant openings? The following problems are designed to be solved by spreadsheet.

Reference no: EM131462951

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