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A new project will cost $80,000 initially and w last for 7 years, at which time its salvage value will be $2,500. Annual revenues are
A new project will cost $80,000 initially and w last for 7 years, at which time its salvage value will be $2,500. Annual revenues are anticipated to be $15,000 per year. The initial cost is believed to be accurate, but the estimates of annual revenue and salvage value are subject to error. For a MARR of 15 percent/year, find the AW of the project for the worst case, best case, and the expected value from the following estimates: Parameter Initial Cost Salvage Value Annual Revenue Pessimistic $80,000 $1,000 $10,000 Most Likely $80,000 $2,500 $15,000 Optimistic $80,000 $4,000 $25,000
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