ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Use the data table and the spiderplot below to answer the questions.
Item
Initial investment, $
Annual revenue, $
Annual expense, $
Market value, $
Project life, years
PW, in
-20%
-15%
-10%
PW v.% Change in Parmeter
$15,000.00
$10,000.00
$5,000.00
ههای
-5%
($5,000.00)
($10,000,00)
($15,000.00)
($20,000.00)
($25,000.00)
Estimated Cash Flows
55,000
7000
4500
1800
8
0%
5%
10%
Change in Parameter, in %
15%
20%
25%
30%
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Transcribed Image Text:Use the data table and the spiderplot below to answer the questions. Item Initial investment, $ Annual revenue, $ Annual expense, $ Market value, $ Project life, years PW, in -20% -15% -10% PW v.% Change in Parmeter $15,000.00 $10,000.00 $5,000.00 ههای -5% ($5,000.00) ($10,000,00) ($15,000.00) ($20,000.00) ($25,000.00) Estimated Cash Flows 55,000 7000 4500 1800 8 0% 5% 10% Change in Parameter, in % 15% 20% 25% 30%
a. (Y/N) Is this project economically justified, EJ?
O Yes
NO
b. Why or Why Not? Economically Justified, EJ
O Unkown
O EJ because PW < 0
Not EJ because likely AW<0
O EJ because AW > 0
c. The parameter most sensitive to breakeven is?
MV(8)
AE
OAR
O FC
d. The parameter that management should be least worried about is?
O FC
O AR
O AE
OMV(8)
e, (T/F) If the initial investment cost is reduced by $5,000, the project will be economically justified.
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Transcribed Image Text:a. (Y/N) Is this project economically justified, EJ? O Yes NO b. Why or Why Not? Economically Justified, EJ O Unkown O EJ because PW < 0 Not EJ because likely AW<0 O EJ because AW > 0 c. The parameter most sensitive to breakeven is? MV(8) AE OAR O FC d. The parameter that management should be least worried about is? O FC O AR O AE OMV(8) e, (T/F) If the initial investment cost is reduced by $5,000, the project will be economically justified.
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