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B. Problem Statement (30 questions) Business is thriving and, as a result, the Soho Paving Company is contemplating the purchase of additional landscaping equipment. While
B. Problem Statement (30 questions) Business is thriving and, as a result, the Soho Paving Company is contemplating the purchase of additional landscaping equipment. While the Company has done the necessary due diligence, it is doubtful that the investment would perform exactly as projected by the dealership consultant . Due to lingering uncertainty, you have been mandated by the Company to perform a one-way sensitivity analysis of your potential purchase. The current "best" guesses for the project parameters are: 1. Initial Cost (P) = $960,000 2. Salvage value (SV) = $12,133 3. Annual operating revenues (AOR) - $600,000 4. Annual operating costs (AOC) = $325,000 5. Economic life (N) - 5 years 6. MARR = 10% 7. Inflation Rate = 0%. 2 One-way Sensitivity Table Parameters -15% +10% +15% Net Present Worth (NPW) -10% -5% Reference +5% Scenario AA BB CC P AOR DD EE AOC FF GG HH KK SV N LL MM MARR NN 00 PP 21. The breakeven (NPW=$0) dollar value of the annual revenue parameter (AOR) is The breakeven (NPW=$0) dollar value of the annual cost parameter (AOC) is 23. The breakeven (NPW=$0) dollar value of the salvage value parameter (SV) is 24. The breakeven (NPW=$0) life (N) of the project is 25. . The breakeven (NPW=$0) MARR of the project is
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