Question
A warehouse modernization plan requires an investment of #3,000,000 in equipment. At the end of the 15-year planning horizon, it is anticipated that the equipment
A warehouse modernization plan requires an investment of #3,000,000 in equipment. At the end of the 15-year planning horizon, it is anticipated that the equipment will have a salvage value of $600,000. Annual savings in operating and maintenance costs due to the modernization are anticipated to total $1,400,000 per year. A MARR of 15% is used by the firm. Perform a sensitivity analysis to determine the effects on the economic feasibility of the plan due to errors in estimating the initial investment required and the annual savings. Plot your indifference line and clearly indicate acceptance and rejection zones.
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