Cornell Chemical Limited manufactures a basic chemical compound that is sold for $116 per litre. A new variant of the chemical has been developed, and if the basic compound were processed into the new variant the selling price would be $144 per litre. Cornell expects the market for the new compound variant to be 10 000 litres and determines that processing costs to refine the basic compound into the new variant would be $300 000.
Required:
(1) Should Cornell produce the new compound variant?

Question

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The Answer of Cornell Chemical Limited manufactures a basic chemical compound that is sold for $116 per litre. A new variant of the chemical has been developed, and if the basic compound were processed into the new variant the selling price would be $144 per litre. Cornell expects the market for the new compound variant to be 10 000 litres and determines that processing costs to refine the basic compound into the new variant would be $300 000.
Required:
(1) Should Cornell produce the new compound variant?

Cornell Chemical Limited Manufactures a Basic Chemical Compound That Is