2. You have been asked to perform a sensitivity analysis on a plant modernization plan. The initial investment is $30,000. Expected annual savings is $13,000. Salvage value is $7,000 after a 7 year planning horizon. The MARR is 12%a. Determine the PW of this modernization.cion 42.b. -80%cion 52.c. -60%cion 62.d. -40%zion 72.e. -20%cion 82.f. +20%tion 92.g. +40%cion 102.h. Determine the percentage change in net annual savings that causes a reversal in the decision regarding the attractiveness of the project1010000010-1000

Initial Investment = 30000 Annual Savings = 13000 Useful life = 7 Salvage Value = 7000 MARR = 12% Present worth refers to the discounted value of all the cash flows .Present Worth = -300000 + 13000(P/A , 12% , 7 ) + 70000(P/F , 12% , 7 ) => -300000 + 13000(4.563756539 ) + 7000(0.4523492153) => 32430 As the PW is positive the modernization is feasible . For modernization to not be feasible : PW < 0 Let the saving rate be (x) PW = -300000 + x(4.563756539 ) + 7000(0.4523492153) < 0 x < 26836/4 x < 6709 (Saving less than 6709 will make modernization not worth it ) Percentage Change = 13000- 6709)/13000 = 48% Decline of more than 48% in savings would make the modernization feasible .

Business

Economics

2. You have been asked to perform a sensitivity analysis on a plant modernization plan. The initial investment is $30,000. Expected annual savings is $13,000. Salvage value is $7,000 after a 7 year planning horizon. The MARR is 12% a. Determine the PW of this modernization. n 4 2.b. -80% n 5 2.c. -60% n 6 2.d. -40% n 7 2.e. -20% 10 10 Oc Oc

2. You have been asked to perform a sensitivity analysis on a plant modernization plan. The initial investment is $30,000. Expected annual savings is $13,000. Salvage value is $7,000 after a 7 year planning horizon. The MARR is 12% a. Determine the PW of this modernization. n 4 2.b. -80% n 5 2.c. -60% n 6 2.d. -40% n 7 2.e. -20% 10 10 Oc Oc

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Hand written plzzzz asap plz fast
Consider the following cash flow profile and assume MARR is 10%/yr. Solve, a. Determine the ERR for this project. b. Is this project economically attractive?
1. Tom International LLC has developed pessimistic, most likely, and optimistic estimates for a project. The cost and benefit data are given in the table below. What is the expected NPW for this project? MARR = 10% Data Pessimistic Most Likely Optimistic 1,000 First Cost, $ Benefits/ Year, $ Life, Years A. $1,420 B. C. D. $1,813 $1,217 $1,580 1,500 250 6 450 8 800 500 10
FOR QUESTION NUMBER 21 Determine feasibility of the project using IRR and ERR of the project. Is it acceptable? Use &= 15% and MARR =20%. Investment Capital PhP 10,000 Expected life 5 years Market Value -1,000 Annual Receipts 8,000 Annual Expenses 21. Determine the IRR value of this project, is it acceptable? a. Yes, IRR = 0.3062 b. No, IRR= 0.1981 4,000 c. Yes, IRR = 0.3264 d. No, IRR = 0.1865
You are considering investing RM64000 in new equipment. You estimate that the net cash flows will be RM14000 during the first year, but will increase by RM2500 per year the next year and each year thereafter. The equipment is estimated to have a 7-year service life and a net salvage value of RM5300 at that time. Assume MARR of 9%. a.Calculate the annual capital cost CR (ownership cost) for the equipment. Format : 87348 b.Determine the equivalent annual savings. Format: 60952 c.Is this a wise investment? Y/N. Format: A
need answer , absuletly upvote !!!!
Use excel. Instant upvote.
a. What is the duration (life) of the project if the MARR used by Jane was 1%
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
An equipment is bought for $9,000 and sold at the end of its service life for $800. If the service period is 10 years and the MARR is 10%, then the minimum annual savings that this equipment must yield for it to break even is closest to? a) $1,414 b) $1,701 c) $1,312 O d) $1,514
Without excel
A company is considering purchasing either machine A or B, given that MARR is 10%, and the company projected sales is 40,000 units. Machine A Machine B $90,000 $39,000 $1100 +.02xunits $600 +0.03xunits Initial cost $70,000 $40,000 $1000+0.03xunit $500+0.05xunit 8 years $15,000 Annual revenues Annual Operation cost Annual Maintenance cost 6 years $10,000 Life span Salvage value Draw the cash fiow diagram for each machine. a. b. Compute ERR for each machine, based on computed ERRS, which machine is to be selected7 Explain the difference between the IRR & ERR methods as explained in the lecture.