A $500,000 SMP investment is being considered. It is anticipated that annual savings of $92,5000 will...
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A $500,000 SMP investment is being considered. It is anticipated that annual savings of $92,5000 will result from the investment. A salvage value of $50,000 is expected at the end of the 10-yr planning horizon. The MARR is 10%. Analyze the sensitivity of annual worth to errors in estimating (1) the initial investment, (2) the annual savings, (3) the salvage value, (4) the duration of the investment, and (5) the MARR. Specifically, consider an error range of +50% AW (10%) = $500,000(A/P 10%, 10) + $50,000(A/F 10 %, 10) + $92,500 A $500,000 SMP investment is being considered. It is anticipated that annual savings of $92,5000 will result from the investment. A salvage value of $50,000 is expected at the end of the 10-yr planning horizon. The MARR is 10%. Analyze the sensitivity of annual worth to errors in estimating (1) the initial investment, (2) the annual savings, (3) the salvage value, (4) the duration of the investment, and (5) the MARR. Specifically, consider an error range of +50% AW (10%) = $500,000(A/P 10%, 10) + $50,000(A/F 10 %, 10) + $92,500
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Answer rating: 100% (QA)
Answer The original annual worth calculation is as follows AW10 500000 AP 10 10 50000 AF 10 10 92500 ... View the full answer
Related Book For
Fundamentals of Financial Management
ISBN: 978-0324597707
12th edition
Authors: Eugene F. Brigham, Joel F. Houston
Posted Date:
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