For the project with cash flow given below find the most sensitivefactor among annual benefit, annual cost and salvage value if thechanges by ±20%.Initial investmentAnnual revenueAnnual CostSalvage ValueMARRLife in yearsProjectRs.2,00,000Rs.1,00,000Rs. 40,000Rs. 50,00010%5

A sensitivity analysis can be used to determine the most sensitive factor among annual benefit,…

For the project with cash flow given below find the most sensitive factor among annual benefit, annual cost and salvage value if they changes by ±20%. Initial investment Annual revenue Annual Cost Salvage Value MARR Life in years Project Rs.2,00,000 Rs.1,00,000 Rs. 40,000 Rs. 50,000 10% S

For the project with cash flow given below find the most sensitive factor among annual benefit, annual cost and salvage value if they changes by ±20%. Initial investment Annual revenue Annual Cost Salvage Value MARR Life in years Project Rs.2,00,000 Rs.1,00,000 Rs. 40,000 Rs. 50,000 10% S

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: None

A: Calculate the present value of the uniform annual benefit for the useful life of 4 years:Calculate…

Q: The FW analysis: a. Is appropriate when one plans to achieve a particular financial goal at some…

A: FW(future worth analysis) it is the method of project evaluation in which analyst or management of…

Q: A $1000 first year, then increasing $575 per year B C D $100 first year, then increasing $500 per…

A: We are provided with the initial and annual costs of 4 alternatives and we need to derive choice…

Q: Use Present Worth Analysis to determine whether Alternative A or B should be chosen. Items are…

A: The present worth of a project or investment refers to its value at present based on the associated…

Q: Machine Initial cost, $ Annual cost, $/year Salvage value, $ Life, years O-$87,840 The estimates for…

A: present value is the value of investment in today's dollar. Future value is the value of investment…

Q: A city is planning to renovate their current facility with hi-tech computerized systems. Four plans…

A: The B/C ratio analysis is a tool used to assess the feasibility of a project by calculating the…

Q: Five alternatives are being evaluated by the incremental rate of return method. Initial investment |…

A: Incremental income investigation is utilized to choose better or totally unrelated other options,…

Q: A project has a $33000 first cost that returns $9000 per year over its 20 year life. It has a $6000…

A: MARR is an abbreviation for a minimum acceptable rate of return. It is the concept under engineering…

Q: a) Solve for the Net Present Value of the alternatives A and B using interest rates from 0% upward.…

A: Net present values refers to the discounted values of the future cash flow .

Q: ! Required information A company that manufactures magnetic flow meters expects to undertake a…

A: It is the cost incurred by the investor for using the assets, Here, things are included such as…

Q: Using the cash flow shown below decide which alternative is the most economical using (a) Annual…

A: To find the annual worth and present worth of the alternatives we firstly derive present worth using…

Q: Required information A company that manufactures magnetic flow meters expects to undertake a project…

A: Equivalent Annual Cost (EUAC) is used to evaluate the cost of an investment or project on an annual…

Q: Required information A company that manufactures magnetic flow meters expects to undertake a project…

A: The annual worth ascertains the annual cash flow throughout the investment period which is…

Q: 5. If the MARR is 12% per year, compare the alternatives shown below on the basis of a present-worth…

A: The measure that depicts the current value of the future cash flow stream or future money sum at a…

Q: n industrial firm is considering two alternatives for a project. Alternative A will cost $200,000…

A: A B Initial cost 2,00,000 1,80,000 Annual Cost 8000 8200 Overhaul exp 4000 time 10 10…

Q: A city is considering to buy a piece of land and constructing an office complex on it. Their…

A: Future worth refers to the compounded value of the cash flow of each project . More the value of…

Q: Three estimators have estimated a project with a 10-year life. Estimate 1 Estimate 2 Estimate 3…

A: Computing present value includes assuming that a rate of return could be earned on the funds over…

Q: What is the total cost and benfits of Present and NPV for at 5% Interest? and what is the PV of…

A: The total cost of the project can be calculated by summing up all the costs incurred over the…

Q: Some mill investment project ,construction period of 2 years, 18- year production, infrastructure…

A: Given: Let the expected annual profit be x. The values will be seen as: End of the year from 0 to 1…

Q: Three alternatives are considered for project execution by a construction firm. The following cash…

A: Given, Three alternatives : Alternative A, Alternative B and Alternative C The Cashflow is given as…

Q: (engineering economics) Determine the best alternative based on a 12% MARR using the following…

A: Year A B C 0 -100 -120 -40 1 0 0 -50 2 10 40 15 3 10 0 15 4 10 40 15 5 10 0 15 6 10 40…

Q: Some particulars for a project are as follows. Initial Capital Cost in year 0 ($Mn) Follow-up…

A: The initial cost of the project is $1000, and the annual cost will be 10% of the initial cost.…

Q: A company is considering the following two alternatives: Alt. 1 $42,500 6,000 18,500 12,000 1.5…

A: Here we calculate the Net present worth of the both alternative and choose the best alternative so…

Q: A small restaurant costs $350,000. Expected profits equal $22,000/year for 6 years when value is…

A: Project Rate of Return Analysis:In the context of a small restaurant, investors and stakeholders…

Question

For the project with cash flow given below find the most sensitive
factor among annual benefit, annual cost and salvage value if the
changes by ±20%.
Initial investment
Annual revenue
Annual Cost
Salvage Value
MARR
Life in years
Project
Rs.2,00,000
Rs.1,00,000
Rs. 40,000
Rs. 50,000
10%
5

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Conceptual Introduction :

VIEW

Step 2: 1. Calculate the base case NPV :

VIEW

Step 3: 2. Perform sensitivity analysis :

VIEW

Step 4: 3. Analyze The Results :

VIEW

Step 5: 4. Interpretation :

VIEW

Solution

VIEW

Step by step

Solved in 6 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

If More than 2 alternatives you are Company and to decide of is trying investment A > Incremental analysis (Alternativ Alternative: A > Incremental analysis B C if the additional increment Worth while, compare. pairs wins then B vs C A Company Considering 2 different machines at MARR at 12% Both life spans = 10 years M/C X M/CY Initial Cost 160000 285000 Annual Operating Cost 45000 45000 Benefits per year Salvage Value 90000 105000 20000 40000
A company is selling bonds with a face value of $1,000 to raise money for a plant expansion. The bonds pay a coupon rate of 4% per year on a semiannual basis and mature in 5 years. Net of all fees, the company receives $760 from the sale of each bond. What is the company's cost of capital on an annual basis?
None
Required information The TT Racing and Performance Motor Corporation wish to evaluate two alternative machines for NASCAR motor tune- ups. Machine First cost, $ Annual operating cost, $ per year Life, years Salvage value, $ R -250,000 -40,000 3 20,000 Use the AW method at 9% per year to select the better alternative. The annual worth of machine R is $- The better alternative is (Click to select) S -370,500 -50,000 5 20,000 and the annual worth of machine S is $-
Use Annual Cost Analysis to determine whether Alternative A or B should be chosen. The analysis period is 5 years. Assume an interest rate of 6% per year, compounded annually Alternative A Alternative B Initial Cost Annual Benefit Salvage Value Useful Life (yrs) 1800 150 400 5 4230 340 2100 5 Alternative B should be chosen, because its annual benefit is higher than Alternative A's Alternative A should be chosen, because its initial cost is lower than Alternative B's Alternative B should be chosen, because its equivalent annual cost is $85.30 higher than Alternative A's Alternative A should be chosen, because its equivalent annual cost is $85.30 lower than Alternative B's
Complete the following analysis of cost alternatives and select the preferred alternative. The study period is 10 years and the MARR = 15% per year. "Do Nothing" is not an option. A B C Capital investment $15,000 $16,000 $13,500 $18,100 Annual costs 260 290 450 110 Market value at EOY 10 900 1,350 1,700 2,050 FW (15%) - $65,062 - $69,267 ??? - $73,408
2. You are presented with three investment possibilities; however, you only have enough money to invest in one (the opportunities are mutually exclusive). The MARR is 5%,. Which one should be chosen? Make a decision based on an incremental rate of return analysis. A B Initial Cost Annual Benefit $ Salvage ValueS Life (yrs) $ (100,000) $ (150,000) S (210,000) 45,000 $ 35,000 $ 6. 50,000 $ 10,000 S 27,000 40,000 6| 8% ROR 12% 11%
A Construction company may buy a new truck with a 10-year life. Interest is 5%. The cash flows for two likely models are as follows: First cost: $25000 Annual operating cost: $6000 Annual income: $9500 Salvage value: $5000 Using present worth analysis find NPW of benefits of A =
Give correct explanation and answer
(engineering economic) Four alternatives with cash flows (million rupiah) as follows: Determine the best alternative based on a 12% MARR using the following methods: (a) Rate of Return; (b) Payback Period
The city council of Morristown is considering the purchase of one new fire truck. The options are Truck X and Truck Y. The purchase is to be financed by money borowed at 10% per year. Which fire truck should be purchased? The appropriate financial data are as follows: Truck X Truck Y Capital Investment $53000 S69000 Maintenance cost per year $5000 $5500 Useful life 5 years 5 years Reduction in fire damage per $19000 $20000 year Your answer: O Truck X O Neither Truck X nor Truck Y O Truck Y
Assume annual car payments of $6000 for 4 years and an interest rate of 9.381% per year. What initial principal or PW will this repay?