and NPW
(Rainbow) The Rainbow Tavern in Maupin is considering purchasing a 4,000-pound forklift truck, which will be used primarily for processing incoming as well as outgoing kegs. The forklift is fueled by propane. The purchase cost as well as annual operating and maintenance cost are provided below. Annual fuel and maintenance costs are measured in terms of number of shifts per year, where one shift is equivalent to 8 hours of operation Forklift Life expectancy 7 years Initial cost $20, 100 Salvage value $2,000 Maximum shifts per year 260 Fuel consumption/shift 11.1 gallons Fuel cost/unit $2.24/gallon Annual maintenance cost - Fixed cost $1,000 per year Maintenance cost - Variable cost/shift $7 per shift The Rainbow is unsure of the number of shifts per year, but it expects it should be somewhere etween 200 and 260 shifts. The Rainbow uses a MARR of 10% per year as an interest rate compounded annually for project evaluations. (Hint: determine the total cost per year by adding he fuel cost and annual fixed plus variable maintenance cost per the number of shifts.) Determine sensitivity results for the net present worth (cost) of the new forklift truck versus number of shifts per year for a base case of 230 shifts with a worst case of 260 shifts and a best case of 200 shifts a. Determine sensitivity results for the net present worth (cost) of the new forklift truck versus number of shifts per year for a base case of 230 shifts with a worst case of 260 shifts and a best case of 200 shifts. b. Assuming the base case has a probability of 50%, the 260 case has a probability of 30%, and the 200 case has a probability of 20% probability. What is the expected value (Rainbow) The Rainbow Tavern in Maupin is considering purchasing a 4,000-pound forklift truck, which will be used primarily for processing incoming as well as outgoing kegs. The forklift is fueled by propane. The purchase cost as well as annual operating and maintenance cost are provided below. Annual fuel and maintenance costs are measured in terms of number of shifts per year, where one shift is equivalent to 8 hours of operation Forklift Life expectancy 7 years Initial cost $20, 100 Salvage value $2,000 Maximum shifts per year 260 Fuel consumption/shift 11.1 gallons Fuel cost/unit $2.24/gallon Annual maintenance cost - Fixed cost $1,000 per year Maintenance cost - Variable cost/shift $7 per shift The Rainbow is unsure of the number of shifts per year, but it expects it should be somewhere etween 200 and 260 shifts. The Rainbow uses a MARR of 10% per year as an interest rate compounded annually for project evaluations. (Hint: determine the total cost per year by adding he fuel cost and annual fixed plus variable maintenance cost per the number of shifts.) Determine sensitivity results for the net present worth (cost) of the new forklift truck versus number of shifts per year for a base case of 230 shifts with a worst case of 260 shifts and a best case of 200 shifts a. Determine sensitivity results for the net present worth (cost) of the new forklift truck versus number of shifts per year for a base case of 230 shifts with a worst case of 260 shifts and a best case of 200 shifts. b. Assuming the base case has a probability of 50%, the 260 case has a probability of 30%, and the 200 case has a probability of 20% probability. What is the expected value
