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?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![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?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fca7ca693-0af7-4ccf-a688-a8dece9c4932%2F1075e763-7eed-481e-9000-15cb8925a6f6%2F837n32qp_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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?
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