6. Consider the following estimated cash flows for a project under consideration. $585,000 $187,500 $50,800 Investment cost Annual revenues Annual expenses Upgrade cost every 5 years (@5, 10, and 15) Salvage value at end of year 20 $150,000 $300,000 The company MARR = 15% and the study period is 20 years. Determine % change to decision reversal for annual revenues and investment cost. To which factor is the decision more sensitive and how do you know?

6. Consider the following estimated cash flows for a project under consideration. $585,000 $187,500 $50,800 Investment cost Annual revenues Annual expenses Upgrade cost every 5 years (@5, 10, and 15) Salvage value at end of year 20 $150,000 $300,000 The company MARR = 15% and the study period is 20 years. Determine % change to decision reversal for annual revenues and investment cost. To which factor is the decision more sensitive and how do you know?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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