A company planning to borrow $10.5 million for a plant expansion is not sure what the interest rate will be when it applies for the loan. The rate could be as low as 10% per year or as high as 12% per year. The company will move forward with the project only if the annual worth of the expansion is below S5.7 million. If the M&O cost is fixed at S3.1 million per year and the salvage will be $2 million if the interest rate is 10% and $2.5 million if it is 12%, is the decision to move forward with the project sensitive to the interest rate? Use a 5-year study period 7. determined to be S-135,143 with a high degree of certainty. The cost estimates for the D103 model are less certain. The manager requested a "worst case" analysis with three estimates for P and n as shown on the next page. The annual operating cost is fixed at $4000 and the salvage value of the chamber is expected to be 10% of the first cost. Perform the analysis to determine if D103 is favored under any of the first cost and life scenarios indicated. The company's MARR is 10% per year. Fidelity Life Insurance has a document imaging system that needs replacement. A local salesperson quoted a cost of $10,000 with an estimated salvage of $900 after 5 or more years. If the system is expected to save S1700 per year in clerical time, find the payback time at 8% per year. As a practice, the office manager purchases equipment only when the payback is less than 6 years. Otherwise, he prefers to lease. Should the imaging system be purchased or leased? 9