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QUESTION 3 Your dad made the following estimates as he considered upgrading the air-conditioning system in their home. Use AW analysis to determine the sensitivity

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QUESTION 3 Your dad made the following estimates as he considered upgrading the air-conditioning system in their home. Use AW analysis to determine the sensitivity of the economic decision to interest rates of 4%, 6%, and 8% per year. Is the decision sensitive to a change in interest rates within this range? System 1 2 First cost, $ 10,000 17,000 Annual operating cost, $ 600 150 Salvage (disposal) value, $ 100 300 New compressor and motor cost at midlife, $ l,750 3,000 Life, years 8 12 0 Yes ONO

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