Question: 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

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 company's 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. 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 company's 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
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