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B. Problem Statement Your growing landscaping business requires that you consider the purchase of a new truck. While you've done the necessary due diligence
B. Problem Statement Your growing landscaping business requires that you consider the purchase of a new truck. While you've done the necessary due diligence and are satisfied with the projected values of key project parameters (e.g., annual revenues and operating costs), you are not fully confident that your world will unfold exactly as projected. Due to lingering uncertainty, you've mandated a former classmate to perform a one-way sensitivity analysis of your project. The current "best" guesses for project parameters are listed below: 1. Initial Cost (P) = $300,000 2. Salvage value (SV) = $22,198 3. Annual operating revenues (AOR) = $250,000 4. Annual operating costs (AOC)= $165,000 5. Economic life (N) = 5 years 6. MARR 10% 7. Inflation Rate = 0%. One-way Sensitivity Table Net Present Worth (NPW) Parameters -15% -10% -5% Reference Scenario AA +5% +10% +15% P CC BB AOR EE DD AOC FF GG SV II HH N JJ KK MARR NN MM LL
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