5. (15 points) A new device is being purchase for a certain project in a local community, The following financial parameters have been estimated: Initial cost Annual savings (AS) Useful life (N) Salvage value (end of 10 years) MARR (annual) $100,000 $20,000 10 years $30,000 10% T here is considerable uncertainty surrounding the estimates of annual savings- between -20% and +25% , and useful life-7 years to 12 years Construct the best and worst scenarios a) b) Draw a spider plot (PW v.s. % ) , and conclude whether any of the two is sensitive, and which of the two is more sensitive. First compute the following: (Interest Table for 10% is given) Nominal PW-100K+ 30K (P/F, 10 % , 10 ) + 20K (P/A, 10 % ,10) 34,458 PW(AS-80%)--100K+30K*(P/F ,10 % , 10) + 16K* (P/A,10 % 10 ) -$9.879 PW(AS 125 % )--100K+30K (P/F, 10 % ,10) + 25K* (P/A, 10 % , 10) -$65,180 -34 457 -34 47 PW(N-70%) -100K+30K*(P/F, 10%, 10 )+ 20K * (P/ , 1 0 % , 10 ) - PW(N-120 %)-100K+30K ( P/F ,10 % , / 0 ) + 20K *(P/A,10 % , 10 )- Then draw the spider plot and determine whether () PW is sensitive to either parameter and () the decision is sensitive to either parameter 5. (15 points) A new device is being purchase for a certain project in a local community, The following financial parameters have been estimated: Initial cost Annual savings (AS) Useful life (N) Salvage value (end of 10 years) MARR (annual) $100,000 $20,000 10 years $30,000 10% T here is considerable uncertainty surrounding the estimates of annual savings- between -20% and +25% , and useful life-7 years to 12 years Construct the best and worst scenarios a) b) Draw a spider plot (PW v.s. % ) , and conclude whether any of the two is sensitive, and which of the two is more sensitive. First compute the following: (Interest Table for 10% is given) Nominal PW-100K+ 30K (P/F, 10 % , 10 ) + 20K (P/A, 10 % ,10) 34,458 PW(AS-80%)--100K+30K*(P/F ,10 % , 10) + 16K* (P/A,10 % 10 ) -$9.879 PW(AS 125 % )--100K+30K (P/F, 10 % ,10) + 25K* (P/A, 10 % , 10) -$65,180 -34 457 -34 47 PW(N-70%) -100K+30K*(P/F, 10%, 10 )+ 20K * (P/ , 1 0 % , 10 ) - PW(N-120 %)-100K+30K ( P/F ,10 % , / 0 ) + 20K *(P/A,10 % , 10 )- Then draw the spider plot and determine whether () PW is sensitive to either parameter and () the decision is sensitive to either parameter