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(20 points) An investment of $400,000 is made at time zero. Revenues are expected to grow from $100,000 at time 1 by $50,000 each year

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(20 points) An investment of $400,000 is made at time zero. Revenues are expected to grow from $100,000 at time 1 by $50,000 each year for the next six years while costs are expected to remain steady at $50,000 per year. The seven-year project has no salvage value. Is the present worth (use a MARR of 18% ) more sensitive to the investment cost or to the value of the gradient? It is believed that the investment cost will be within 10% to 10% of its estimate, the gradient value will be within 15% to 30% of its estimate, the first year's revenue will be within 15% to 20% of its estimate, and the annual cost will be within 15% to 20% of its estimate. a) Construct a tornado diagram to determine the most critical. b) Construct a spider plot to determine whether the investment cost or the revenue gradient is more sensitive. Also identify, if any, parameters to which the decision is sensitive. (20 points) An investment of $400,000 is made at time zero. Revenues are expected to grow from $100,000 at time 1 by $50,000 each year for the next six years while costs are expected to remain steady at $50,000 per year. The seven-year project has no salvage value. Is the present worth (use a MARR of 18% ) more sensitive to the investment cost or to the value of the gradient? It is believed that the investment cost will be within 10% to 10% of its estimate, the gradient value will be within 15% to 30% of its estimate, the first year's revenue will be within 15% to 20% of its estimate, and the annual cost will be within 15% to 20% of its estimate. a) Construct a tornado diagram to determine the most critical. b) Construct a spider plot to determine whether the investment cost or the revenue gradient is more sensitive. Also identify, if any, parameters to which the decision is sensitive

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