Quick Computing currently sells 10 million computer chips each year at
a price of $20 per chip. It is about to introduce a new chip, and it
forecasts annual sales of 12
million of these improved chips at a price of $25 each. However,
demand for the old chip will
decrease, and sales of the old chip are expected to fall to 3 million
per year. The old chip costs
$6 each to manufacture, and the new ones will cost $8 each. What is
the proper cash flow to use
to evaluate the present value of the introduction of the new chip?

Change in cass flow from old chips
(3,000,000 - 10,000,000)*($20 - $6) = -$98,000,000

Change in cash flow from new chips
(12,000,000 - 0)*($25 - $8) = +$204,000,000

The parts of the calculations stand for
(quantity1 - quantity0)*(profit) = change in cash flow

+$204,000,000 - $98,000,000 = +$106,000,000

Because no intial investment is given, CF0, cash flow at time 0 (the
present) should be set to 0. However, that's unlikely. You either
already know or forgot to give the initial cost of new equipment and
the like.

Set CF1, cash flow at one year from now, at +$106,000,000
If this problem deals with cash flows for a certain number of years,
X, set the frequency of CF1 at X, that # of years.

In summary:

CF0 = 0 or some number not given
CF1 = $106,000,000
CF2 = $106,000,000
...
CFX = $106,000,000

thats great, thank you so much!