A new project will cost \(\$ 80,000\) initially and will last for 7 years, at which time its salvage value will be \(\$ 2,500\). Annual revenues are anticipated to be \(\$ 15,000\) per year. The initial cost is believed to be accurate, but the estimates of annual revenue and salvage value are subject to error. For a MARR of 12 percent/year, plot a two-factor sensitivity graph similar to Figure 13.5. Include a line that separates the favorable and unfavorable regions as well as a box showing the 15 percent error region.

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-30% 20% 10% -0% savin ings error Labor +30% error region Favorable region -50%-40%-30%-20%-10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% x -10% -20%- -30% AW >0 -40% Unfavorable region AW 0 -50% FIGURE 13.5 Equipment cost error