ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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A new shoe production line is being designed at a cost of $245,000 and operating costs are
expected to be $84,000 per year. Planned annual production is 2500 pairs and the price of a pair of
shoes is $110. The line's service life is 14 years, the depreciation rate is 25%. Use a 19% annual interest
rate for the base case. Using the interval [-20%, -10%, +10%, +20%], perform a present worth
sensitivity analysis using a sensitivity graph with respect to the following variables in terms of their
impact on the Present worth.
a) First Cost
b) Operative cost
c) Annual Production
d) Salvage Value

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