Q5) A construction company is planning to purchase a new Backhoe. Most likely estimates are a...

 

Transcribed Image Text:

Q5) A construction company is planning to purchase a new Backhoe. Most likely estimates are a first cost of €50,000, €20,000 Salvage value and a before-tax cash flow relation of the form NCF= -25,000+8,000t per year (t-1, 2,..., n). The MARR for the company varies from 10% to 25% per year for different types of backhoe investments. The economic life of similar equipment varies from 8 to 12 years. Evaluate the sensitivity of PW and AW by varying: A) The parameter of MARR while assuming a constant n=10 years B) The parameter n, while MARR is constant at 10%. (40 Marks) C) DRAWING THE GRAPH IS NOT COMPULSORY. Q5) A construction company is planning to purchase a new Backhoe. Most likely estimates are a first cost of €50,000, €20,000 Salvage value and a before-tax cash flow relation of the form NCF= -25,000+8,000t per year (t-1, 2,..., n). The MARR for the company varies from 10% to 25% per year for different types of backhoe investments. The economic life of similar equipment varies from 8 to 12 years. Evaluate the sensitivity of PW and AW by varying: A) The parameter of MARR while assuming a constant n=10 years B) The parameter n, while MARR is constant at 10%. (40 Marks) C) DRAWING THE GRAPH IS NOT COMPULSORY.