Part-2

Sensitivity Analysis of Investment in a Surface-mount Placement Machine

We are considering investing in a surface-mount placement (SMP) machine: a $480,000 initial investment, annual savings of $92,500 for a 10-year period, and a salvage value of $46,000. Assume a MARR of 10% per year. Determine how sensitive the annual worth (AW) for the investment is to errors in estimating the initial investment, the annual savings, the salvage value, and the MARR. Specifically, for an error range of 50% for each parameter, what is the impact on AW?