Assume you as a process engineer with Lotte Chemicals currently working in the research and planning department. You need to perform an economic analysis to purchase suitable equipment to improve fuel consumption of a machine that is to be undertaken within the next 10 years. Most likely estimates are, n = 10 years, and increased net revenue after expenses of RM 25,000 the first year decreasing by RM 2000 per year thereafter. The Manufacturing Department is concerned about the project's economic viability if the equipment life varies from the 10-year estimate, and the Marketing Department is concerned about sensitivity to the revenue estimate if the annual decrease is larger or smaller than the RM 2000. By estimating your own first cost and salvage value, use MARR = 15% per year and Present Worth equivalence to determine sensitivity to (a) variation in life for 8, 10, and 12 years, and (b) variation in revenue decreases from 0 to RM 3000 per year. Plot the resulting PW values for each parameter. Finally, give a conclusion to be presented to The Manufacturing Department and Marketing Department.

Assume you as a process engineer with Lotte Chemicals currently working in the research and planning department. You need to perform an economic analysis to purchase suitable equipment to improve fuel consumption of a machine that is to be undertaken within the next 10 years. Most likely estimates are, n = 10 years, and increased net revenue after expenses of RM 25,000 the first year decreasing by RM 2000 per year thereafter. The Manufacturing Department is concerned about the project's economic viability if the equipment life varies from the 10-year estimate, and the Marketing Department is concerned about sensitivity to the revenue estimate if the annual decrease is larger or smaller than the RM 2000. By estimating your own first cost and salvage value, use MARR = 15% per year and Present Worth equivalence to determine sensitivity to (a) variation in life for 8, 10, and 12 years, and (b) variation in revenue decreases from 0 to RM 3000 per year. Plot the resulting PW values for each parameter. Finally, give a conclusion to be presented to The Manufacturing Department and Marketing Department