Ned Thompson Labs performs tests on super alloys, titanium, aluminum, and most metals. Tests on metal composites that rely upon scanning electron microscope results can be subcontracted, or the labs can purchase new equipment. Evaluate the sensitivity of the economic decision to purchase the equipment over a range of 20% ± (in 10% increments) of the estimates for P, AOC, R , n , and MARR (range on MARR is 12% to 16%). Use the AW method and plot the results on a sensitivity graph (like Figure). For which parameter(s) is the AW most sensitive? Least sensitive?
Sensitivity analysis graph of percent variation from the most likely estimate

First cost P = $ˆ’220,000
Salvage S = $20,000
Life n = 10 years
Annual operating cost AOC = $ˆ’30,000/year
Annual revenue R = $70,000 per year
MARR i = 15% peryear

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50% 40%- 30%- こ10%- 0% -10%- -20% 50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 509 % Change in individual parameter Parameter Legend Sales price ◇ Direct material + Sales volume x Indirect cost o Direct labor Δ Capital