You are trying to decide whether or not to put in some new capital equipment. You have a line that is running full and you think you could sell more if you could make more.

economics

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You are trying to decide whether or not to put in some new capital equitment. You have a line that is running full and you think you could sell more if you could make more. You can put new equipment on the line that will allow you to increase production and sales by $300,000 per year. You will generate 50 cents of profit for each dollar of incremental sales. You will also have to increase inventory by 25% of any increase in sales to support the increased volume.

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