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A pharmaceutical company has developed a new drug, Wozac, which has just been approved by the FDA. Assume that the demand for the drug Wozac for the first year on the market is expected to be 50,000, and that demand is expected to grow by 5% each year for the next 10 years. To produce the drug, the company must build a plant of a particular capacity. The construction cost is projected to be a linear function of the capacity, at $16 per unit of capacity. Each unit of the drug is to be sold for $3 and incurs a variable cost of $0.20. In addition to the unit variable cost, there is an operating cost of $0.40 per unit of capacity. The company would like to determine how large a plant to build to maximize profit over the next 10 years.


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