Big City Carl, a local politician, is pushing a new dock and pier system at the river
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Question:
Big City Carl, a local politician, is pushing a new dock and pier system at the river to attract new commerce to the city. A committee appointed by the mayor (an opponent of Carl) has developed the following estimates.
Input Variable | Base Case |
Initial building cost | $6,000,000 |
Initial equipment cost | $1,500,000 |
Annual benefits | $3,000,000 |
Annual O&M cost | $1,500,000 |
With a MARR of 6% and a project life of 10 years, perform a sensitivity analysis on the data using PW as the assessment metric. For each input, consider deviation of -10%, -5%, 0%, 5%, 10% from the base case.
- For each deviation of each input, calculate PW and show the result as a table similar to Table 12.2 in the lecture (see below). Then answer the following questions. Round to the nearest integer.
- The NPW of the base case is $
- If the Initial building cost increases by 10%, the NPW is $
- If the Initial equipment cost increases by 10%, the NPW is $
- If the Annual benefits increase by 10%, the NPW is $
- If the Annual O&M cost increases by 10%, the NPW is $
- Plot the sensitivity graph in your Excel spreadsheet. You will need to upload the spreadsheet in the next question.
- Which input has the biggest impact on the PW? Fill in Building, Equipment, Benefits, or O&M.
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