QUESTION 3 Your dad made the following estimates as he considered upgrading the air-conditioning system in their home. Use AW analysis to determine the sensitivity of the economic decision to interest rates of 4%, 6%, and 8% per year. Is the decision sensitive to a change in interest rates within this range? System 1 2 First cost, $ -10,000 -17,000 Annual operating cost, $ -600 -150 Salvage (disposal) value, S -100 -300 New compressor and motor cost at midlife, S -1,750 -3,000 Life, years 12 O Yes O No

QUESTION 3 Your dad made the following estimates as he considered upgrading the air-conditioning system in their home. Use AW analysis to determine the sensitivity of the economic decision to interest rates of 4%, 6%, and 8% per year. Is the decision sensitive to a change in interest rates within this range? System 1 2 First cost, $ -10,000 -17,000 Annual operating cost, $ -600 -150 Salvage (disposal) value, S -100 -300 New compressor and motor cost at midlife, S -1,750 -3,000 Life, years 12 O Yes O No

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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