Sensitivity analysis: Boulder Creek Industries Boulder Creek Industries is considering an investment in equipment based on the following estimates: Cost of equipment Residual value Useful life 10 years a. Determine the net present value of the equipment, assuming a desired rate of return of 12% and annual net cash flows of $800,000. Use the present value tables appearing in Exhibits 2 and 5 of this chapter. Net present value $ $3,000,000 $200,000 b. Determine the net present value of the equipment, assuming a desired rate of return of 12% and annual net cash flows of $400,000, $600,000, and $800,000. Use the present value tables xhibits 2 and 5) provided in the chapter in determining your answer. If required, use the minus sign to indicate a negative net present value. Annual Net Cash Flow $400,000 $600,000 $800,000 Annual Net Cash Flow Net present value c. Determine the net present value of the equipment, assuming a desired rate of return of 15% and annual net cash flows of $400,000, $600,000, and $800,000. Use the present value tables (Exhibits 2 and 5) provided in the chapter in determining your answer. If required, use the minus sign to indicate a negative net present value. $400,000 $600,000 $800,000 Net present value d. Determine the minimum annual net cash flow necessary to generate a positive net present value, assuming a desired rate of return of 12%. Round to the nearest dollar. Annual Net Cash Flow $ e. Boulder Creek industries wants to invest in an equipment and the projections for the same is as follows: Net cash inflow $600,000 Not precontrole $400,000 (6675 600) 66 00 $800,000

Sebifovity analyshs Boulder Geek industries Boubler Creak Industries is corsidering an investrent in equipment based on the following estimates: 3 dif this chapler Wiet prount vahe 1 Mnnat Net Caoh row's c. Baulier Creck indastries wants to bruecr in an ecupoient and the projections for the same is as follows: Nent cantinthar $400,000$600,000$800,000