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only solve part A and do not use excle 1.7 Burlington Motor Carriers, a trucking company, is considering the installation of a two-way mobile satellite

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1.7 Burlington Motor Carriers, a trucking company, is considering the installation of a two-way mobile satellite messaging service on its 2,000 trucks. From tests done last year on 120 trucks, the company found that satellite messaging could cut 60% of its $5 million bill for long-distance communications with truck drivers. More importantly, the drivers who used this system reduced the number of "deadhead" miles-those driven without paying loads-by 0.5%. Applying that improvement to all 230 million miles covered by the Burlington fleet each year would produce an extra $1.25 million in savings. Equipping all 2,000 trucks with the satellite hookup will require an investment of $8 million and the construction of a message-relaying system costing $2 million. The equipment and onboard devices will have a service life of eight years and negligible salvage value; they will be depreciated under the five-year MACRS class. Burlington's marginal tax rate is about 38%, and its required minimum attractive rate of return is 18%. (a) Determine the annual net cash flows from the project. (b) Perform a sensitivity analysis on the project's data, varying savings on the telephone bill and savings in deadhead miles. Assume that each of these variables can deviate from its base-case expected value by 10%,20%, and 30%. (c) Prepare sensitivity diagrams and interpret the results

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