Question

Quick Computing currently sells 12 million computer chips each year at a price of $19 per chip. It is about to

introduce a new chip, and it forecasts annual sales of 22 million of these improved chips at a price of $24 each. However, demand for the old chip will decrease, and sales of the old chip are expected to fall to 6 million per year. The old chip costs $10 each to manufacture, and the new ones will cost $14 each. What is the proper cash flow to use to evaluate the present value of the introduction of the new chip?

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