Question: You have been asked to perform a sensitivity analysis on a company's plan to modernize its facilities to determine the impact of possible errors in
You have been asked to perform a sensitivity analysis on a company's plan to modernize its facilities to determine the impact of possible errors in estimating the net annual savings. The initial investment in the modernization is $30,000. The expected net annual savings are $13,000. The salvage value is $7,000 after a planning horizon of 7 years. MARR is 12% per year.
- Determine if the modernization is economically attractive based on the initial estimates and an annual worth (AW) analysis.
- Determine the AW if the net annual savings change by the following percentages from the initial estimate: 80%, 60%, 40%, 20%, +20%, +40%.
- Determine the percentage change in net annual savings that causes a reversal in the decision regarding the attractiveness of the project.
I want solution for 3 and I want solution with Excel formulas
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
