Question
Annual Income is $45K. The initial investment cost is $120K. Salvage value is $60K. Annual expenses are $5K. Life of the investment is 10 years.
Annual Income is $45K. The initial investment cost is $120K. Salvage value is $60K. Annual expenses are $5K. Life of the investment is 10 years. Minimum Attractive Rate of Return (MARR) is 10%. Note: A project is acceptable if NPW (PW of profits) is positive at MARR.
1. Develop PW equation 2. Vary the value of Annual Income by +/- 5% ,10%, 15%, 20%, 25%, 30%, 35%, 40%, 45% and 50% and re-compute PW values 3. Plot PW-% deviation graph 4. Repeat Steps 2 and 3 for Initial Investment, Salvage Value, Annual Expenses, and Life 5. Identify the interval of variation for which the project is acceptable for each factor 6. Identify the interval of variation for which the project is not acceptable 7. Identify two of the most important parameters (steepest slopes) 8. Develop the Indifference Curve for the selected parameters 9. Examine the Indifference Curve and make further observations
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