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Best Case Worst Case Initial Cost $95,000 $110,000 Labor Savings $25,000 $15,000 Scrap Cost Reduction $6,000 $4,000 Part 3: Is the project justified according to the present worth (PW) in the worst case scenario? O No O Yes

Best Case Worst Case Initial Cost $95,000 $110,000 Labor Savings $25,000 $15,000 Scrap Cost Reduction $6,000 $4,000 Part 3: Is the project justified according to the present worth (PW) in the worst case scenario? O No O Yes

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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lāke Quiz 8.(new question) An engineer proposes to spend $95,000 on a capital project to upgrade a package delivery system. The project is expected to have labor savings of $20,000 a year plus reduce scrap costs by $5000 a year. There is expected to be no salvage value at the end of the equipment life, which is anticipated to be 7 years. MARR is 12%. This question is in five parts. The engineer next performs a sensitivity analysis for a best case and worst case scenario: Best Case Worst Case Initial Cost $95,000 $110,000 Labor Savings $25,000 $15,000 Scrap Cost Reduction $6,000 $4,000 Part 3: Is the project justified according to the present worth (PW) in the worst case scenario? O No Yes
Transcribed Image Text:lāke Quiz 8.(new question) An engineer proposes to spend $95,000 on a capital project to upgrade a package delivery system. The project is expected to have labor savings of $20,000 a year plus reduce scrap costs by $5000 a year. There is expected to be no salvage value at the end of the equipment life, which is anticipated to be 7 years. MARR is 12%. This question is in five parts. The engineer next performs a sensitivity analysis for a best case and worst case scenario: Best Case Worst Case Initial Cost $95,000 $110,000 Labor Savings $25,000 $15,000 Scrap Cost Reduction $6,000 $4,000 Part 3: Is the project justified according to the present worth (PW) in the worst case scenario? O No Yes
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