The managers of a company are considering an investment with the following estimated cash flows. MARR is 15% per year. The company is inclined to make the investment; however, the managers are nervous because all of the cash flows and the useful life are approximate values. The capital investment is known to be within + 4%. Annual expenses are known to be within + 8%. The annual revenue, market value, and useful life estimates are known to be within + 30%. a. Analyze the sensitivity of PW to changes in each estimate individually. Based on your results, make a recommendation regarding whether or not they should proceed with this project. Graph your results for presentation to management. b. The company can perform market research and/or collect more data to improve the accuracy of these estimates. Rank these variables by ordering them in accordance with the need for more accurate estimates (from highest need to lowest need). Click the icon to view the interest and annuity table for discrete compounding when the MARR is 15% per year. Capital investment $32,000 Annual revenues $18,000 Annual expenses $5,500 Market value $500 Useful life 10 years a. Calculate the PW value for the initial amounts. PW(15%) = 30859 (Round to the nearest hundreds.) Analyze the sensitivity PW to changes eac estir individually. (Round PW values to the nearest hundreds and breakeven percent change to one decimal place.) Factor PW Breakeven percent change Factor Change -4% $ 32100 Capital Investment 96.4 % + 4% $ 29600 -8% $ 33100 Annual expenses 111.8 % + 8% $ 28700 -30% $ Annual revenue % + 30% The managers of a company are considering an investment with the following estimated cash flows. MARR is 15% per year. The company is inclined to make the investment; however, the managers are nervous because all of the cash flows and the useful life are approximate values. The capital investment is known to be within + 4%. Annual expenses are known to be within + 8%. The annual revenue, market value, and useful life estimates are known to be within + 30%. a. Analyze the sensitivity of PW to changes in each estimate individually. Based on your results, make a recommendation regarding whether or not they should proceed with this project. Graph your results for presentation to management. b. The company can perform market research and/or collect more data to improve the accuracy of these estimates. Rank these variables by ordering them in accordance with the need for more accurate estimates (from highest need to lowest need). Click the icon to view the interest and annuity table for discrete compounding when the MARR is 15% per year. Capital investment $32,000 Annual revenues $18,000 Annual expenses $5,500 Market value $500 Useful life 10 years a. Calculate the PW value for the initial amounts. PW(15%) = 30859 (Round to the nearest hundreds.) Analyze the sensitivity PW to changes eac estir individually. (Round PW values to the nearest hundreds and breakeven percent change to one decimal place.) Factor PW Breakeven percent change Factor Change -4% $ 32100 Capital Investment 96.4 % + 4% $ 29600 -8% $ 33100 Annual expenses 111.8 % + 8% $ 28700 -30% $ Annual revenue % + 30%