A machine for which the most likely cash flow estimates are given in the following list is being considered for installation.

• Initial cost -$20,000
• Useful life 8 years
• Salvage value $2,000
• Yearly net cash flow attributable to machine $12,000

Assume that the companys MARR =8%. Because of the new technology built into this machine, there is much uncertainty about the above estimates.

1. Draw a tornado diagram that summarizes the sensitivity of PW to a 25% variation to the estimates for Initial Cost, Useful Life and Yearly Net Cash Flow.
2. Draw a spider plot for a 25% variation to the estimates of Initial Cost, Useful Life and Yearly Net Cash Flow. You must include 7 points for each parameter.