Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The question that it is referring to as 4.2 is the following (no need to show calculations for this problem below): 8 and 9. If

image text in transcribed
The question that it is referring to as 4.2 is the following (no need to show calculations for this problem below):
image text in transcribed
8 and 9. If a sensitivity analysis was performed on scenario 2 machine in problem 4.2, by varying the purchase price, the useful life, and the internal rate of return (that is 3 factors) by + 20% each, how many PV calculations you have to make, and how many points you will plot for the sensitivity analysis. (You do not have to do the analysis, just show the numbers) Number of PV calculations? Number of points to plot on the sensitivity curve? 9. Compare the two scenarios for acquiring a machine for a project for 24 years expected operations, at a company with an internal rate of return of i= 17%. Which scenario is better? Please round to the nearest S. Scenario 1. Buy an initial small machine at $15,000, it cost $2,400/year to run for the first 14 years, buy a second larger machine at $25,000 and run it for 10 years at a cost of $5,000/year. There is no salvage value at the end of service for either machine. Scenario 2. Buy a large machine for $42,000 and run it for 24 years at a cost of $1,000/year. At the end of the 24 years, the machine is assumed to have a salvage value of $8,500

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Urban Public Finance

Authors: D. Wildasin

1st Edition

0415851882, 978-0415851886

More Books

Students also viewed these Finance questions