Question
An online patient diagnostics system for surgeons has the following point estimates: A first cost of $200,000 to install and $5000 annually to maintain over
An online patient diagnostics system for surgeons has the following point estimates: A first cost of $200,000 to install and $5000 annually to maintain over its expected life of 5 years. Added revenue is estimated to average $60,000 per year. Examine the sensitivity of present worth, PW at a MARR of 10% per year to variation in selected parameter estimates, while others remain constant.
a. Sensitivity to first cost variation: $150,000 to $250,000 (25% to + 25%).
b. Sensitivity to revenue variation: $45,000 to $75,000 (25% to + 25%).
c. Sensitivity to life variation: 4 years to 7 years (20% to + 40%)
Required:
1. Plot the results of parts a, b and c on a graph (spider plot) of PW changes with respect to first cost, FC, revenue AR, and life, N. The percent change is typically on the X-axis while the category (FC, AR and N) are on the Y-axis. (See the attached spreadsheet.
2. Find the breakeven percentages for each parameter.
Note, the base case indicates the projects economically justified. The sensitivity required by this problem is not quite the same as presented in the attached spreadsheet. Make the needed adjustment:
Use excel
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