(Calculating inflation and project cash flows) Carlyle Chemicals is evaluating a new chemical compound used in the manufacture of a wide range of consumer products. The firm is concerned that inflation in the cost of raw materials will have an adverse effect on the  project's cash flows.  Specifically, the firm expects that the cost per unit  (which is currently $0.90 ) will rise at a rate of 13 percent annually over the next three years. The  per-unit selling price is currently  $0.99, and this price is expected to rise at a meager 4 percent annual rate over the next three years. If Carlyle expects to sell 5.5, 7.5, and 9.5 million units for the next three  years, respectively, what is your estimate of the  firm's gross  profits? Based on this  estimate, what recommendation would you offer to the  firm's management with regard to this  roduct?  

(Note : Be sure to round each unit price and unit cost per year to the nearest  cent.)

The gross profit or  (loss) for year 1 is  (Round to the nearest  dollar.)

The gross profit or  (loss) for year 2 is  (Round to the nearest  dollar.)

The gross profit or  (loss) for year 3 is  (Round to the nearest  dollar.)

Since the gross profits are steadily

Decreasing Carlyle needs to decrease the rate of growth in cost  and/or decrease the rate of growth in price