The Green Thumb Seed Company may purchase a new security system for its lab. Each alternative has a 10-year useful life. Which system should be purchased, based on EAW at an interest rate of 6%? Alternative I Spy Gotcha Cost $120,000 140,000 Annual Savings $20,000 22,000 Salvage Value $10,000 25,000 The cost may be 20% higher or 10% lower, the annual savings may be either 40% higher or lower, and the salvage value may be as as high as shown or as low as zero. Construct a spiderplot for the difference in the EAW (the incremental EAW) for the two security systems. For example, at the base case, the incremental EAW would be =2000+pmt( 6%,10,20000,-15000).
The Green Thumb Seed Company may purchase a new security system for its lab. Each alternative has a 10-year useful life. Which system should be purchased, based on EAW at an interest rate of 6%? Alternative I Spy Gotcha Cost $120,000 140,000 Annual Savings $20,000 22,000 Salvage Value $10,000 25,000 The cost may be 20% higher or 10% lower, the annual savings may be either 40% higher or lower, and the salvage value may be as as high as shown or as low as zero. Construct a spiderplot for the difference in the EAW (the incremental EAW) for the two security systems. For example, at the base case, the incremental EAW would be =2000+pmt( 6%,10,20000,-15000).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please show how you made your spider plot-
Transcribed Image Text:The Green Thumb Seed Company may purchase a new security system for its lab. Each alternative
has a 10-year useful life. Which system should be purchased, based on EAW at an interest rate of
6%?
Alternative
I Spy
Gotcha
Cost
$120,000
140,000
Annual Savings
$20,000
22,000
Salvage Value
$10,000
25,000
The cost may be 20% higher or 10% lower, the annual savings may be either 40% higher or lower,
and the salvage value may be as as high as shown or as low as zero. Construct a spiderplot for the
difference in the EAW (the incremental EAW) for the two security systems. For example, at the base
case, the incremental EAW would be =2000+pmt(6%,10,20000,-15000).
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