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Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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
Transcribed Image Text:8.35 Emerson Electric is considering the purchase of equipment that will allow
the company to manufacture a new line of wireless devices for home appliance
control. The first cost will be $80,000 and the life estimated is 6 years with a
salvage value of $10,000. Three different salespeople have provided estimates
regarding the added revenue the equipment will generate. Salespersons 1,2,
and 3 have made estimates of $10,000, $16,000, and $18,000 per year,
respectively. If the company's MARR is 8% per year, use a PW=based relation
to perform a sensitivity analysis to assist in the decision to purchase the
equipment. This question is in four parts.
Part 4: Based on the results of the sensitivity analysis using three different
salespeople's estimate of added revenue, what can you conclude about this
purchase?
The decision to purchase the equipment is sensitive to revenue estimates.
Recommend the purchase of the equipment..
Do not recommend the purchase of the equipment..
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- Judd 57 Joel Gus Tim $3 2. 1 $5 $2 First film Second film Third film Fourth film Fifth film 1. 0. 0. 5. 2. 1 a. Within the dorm room, is Ux showing of a movie a public good? Why or why not? b. W itcosts S5 to rent a movic how many movies should the mommates rent to maximize tothl surplus? c. li they choose the optimal number from part (b)and then split the cost of renting the movies equally, how much surplus does.cach person obtain from wakhing the me d. s there any way tospl ost.tormsre that everyone benefits? What practical problems does this solution reise? Suppose they agmeinarancetochoxxe the efficient number and to split the cosr of the movies equally. When fudd is asked his wiling ness to pay, will he have an incentive to toll the Iruth? If so, why? f not. what will he he tempted (1అ) బ* E What does this example teach you abou the optimal provision of public goods? yol public gods?arrow_forwardSubject: HI6026 AUDIT, ASSURANCE AND COMPLIANCEQuestion: Explain the definition of the audit expectation gap? Then, discuss some approaches to reducing the expectation gap.arrow_forwardMultiple choicearrow_forward
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