Q1) TALEB FIRST student services copy center purchased a copy machine at a cost of KD25,000. Maintenance costs were KD5500 the first year, KD1500 the second year, and KD1,300 the third year. The copy center sold the machine at KD35,000 since the maintenance cost in the first year included the installation of a computerized printing network thus increasing the value of the copy machine. Determine the sensitivity of the rate of return to a 25% change in a. Purchase price. b. Selling price.

Q2) Hemisphere Electric may purchase equipment to manufacture a new line of wireless devices for home appliance control. The first cost will be $80,000, and the life is estimated at 6 years with a salvage value of $10,000. Different people in marketing have provided revenue estimates that the devices will generate. The estimates range from a low of $10,000 to a high of $20,000, with an average of $16,000 per year. If the MARR is 8% per year, use PW to determine if these different estimates will change the decision to purchase the equipment.