PART TWO (7 marks): An investor pays $500,000 for a land to construct a production facility. Moreover, he pays $30,000 for registration and licensing and $280,000 for machines. The product that will be produced in the production facility will cost $20 and will be sold for $25 for the next five years. Given these information and MARR = 10%, answer the following questions: 1. If the annual overhead cost is estimated to be $80,000 and the annual production will be 40,000 units for the five years, construct the cash-flow diagram (3 marks). 2. Is the project feasible for the given period? Show your calculations (2 marks). 3. If the investor wishes to know what is the annual production quantity that makes his investment at least safe NOW. Calculate this quantity (2 marks).

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