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A computer chip manufacturer is selling 10 million chips per year priced at $10 each. It is about to introduce a new chip that will be priced at $15 each and it expects to sell 15 million. However, demand for the old chips will fall and sales of the old chips are expected to fall to 4 million per year. The old chip costs $7 each to manufacture and the new ones will cost $9 each. What is the correct cash flow to use to evaluate the present value of the introduction of the new chip?

Basic Finance, Finance

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