. ction nice per unit. 11.7 Burlington Motor Carriers, a trucking company, is considering the installation of a two-way mobile satellite messaging service on its 2,000 trucks. From tests done last year on 120 trucks, the company found that satellite messaging could cut 60% of its $5 million bill for long-distance communications with truck driv- ers. More importantly, the drivers who used this system reduced the number of deadhead" miles -- those driven without paying loads --by 0.5%. Applying that improvement to all 230 million miles covered by the Burlington fleet each year would produce an extra $1.25 million in savings. Equipping all 2,000 trucks with the satellite hookup will require an invest- ment of $8 million and the construction of a message-relaying system costing $2 million. The equipment and onboard devices will have a service life of eight years and negligible salvage value; they will be depreciated under the five-year MACRS class. Burlington's marginal tax rate is about 38%, and its required mini- mum attractive rate of return is 18%. (a) Determine the annual net cash flows from the project. (b) Perform a sensitivity analysis on the project's data, varying savings on the telephone bill and savings in deadhead miles. Assume that each of these var- iables can deviate from its base-case expected value by +10%, +20%, and (c) Prepare sensitivity diagrams and interpret the results. do +30%. Peal