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
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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?
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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