A company proposes to replace an existing machine with a new one costing $150 000. It is
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A company proposes to replace an existing machine with a new one costing $150 000. It is estimated that the use of the new machine will result in net savings over the next four years of $50 000 per annum. The company will borrow $150 000 at an interest rate of 10% per annum to pay for the machine.
Required
Calculate the degrees of sensitivity as regards the cost of the machine and the annual operational savings.
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To calculate the degrees of sensitivity regarding the cost of the machine and the annual operational savings we can perform a sensitivity analysis Sensitivity analysis helps us understand how changes ...View the full answer
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