WHICH OPTION IS CORRECT? In evaluating the sensitivity of an alternative to its first cost, Its AW was calculated for changes in the estimated first cost by - 10%, + 5%, and +15%. The resulting AW values were $+21,000, $-2410, and $-34,000, respectively. On the basisof these values, one could conclude thatMultiple Choicethe attractiveness of the alternative is not sensitive to its first cost.the attractiveness of the alternative is slightly sensitive to its first cost.the attractiveness of the alternative is highly sensitive to its first cost.can't tell whether the attractiveness of the alternative is sensitive to its first cost or not.

The time value of money refers to the concept that a sum of money is valued more now than the same sum will be at a future time period due to its earnings ability in the interim. The time value of money the most important principle of finance,Option "c" is correct When we compare the 10% decrease and the 15% increase in the first cost, we see that the increased cost is (1.15)(0.9)=1.28 times bigger than the decreased cost, yet the annual worth of the increased cost alternative decreased by 262% 34,000+21,00021,000 = 2.62The decision is, therefore, highly sensitive to variation in the first cost.therefore we can say that The attractiveness of the alternative is highly sensitive to its first cost

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In evaluating the sensitivity of an alternative to its first cost, Its AW was calculated for changes in the estimated first cost by - 10%, + 5%, and +15%. The resulting AW values were $+21,000, $-2410, and $-34,000, respectively. On the basis of these values, one could conclude that Multiple Choice O O the attractiveness of the alternative is not sensitive to its first cost. the attractiveness of the alternative is slightly sensitive to its first cost. the attractiveness of the alternative is highly sensitive to its first cost.

In evaluating the sensitivity of an alternative to its first cost, Its AW was calculated for changes in the estimated first cost by - 10%, + 5%, and +15%. The resulting AW values were $+21,000, $-2410, and $-34,000, respectively. On the basis of these values, one could conclude that Multiple Choice O O the attractiveness of the alternative is not sensitive to its first cost. the attractiveness of the alternative is slightly sensitive to its first cost. the attractiveness of the alternative is highly sensitive to its first cost.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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