ll your answers must be completed in Excel – All your answers must be completed in Excel 1.
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? All your answers must be completed in Excel 1. (20 points) Growth Fertilizer purchases a gravity settling tank by borrowing the $50,000 purchase price. The loan is to be repaid with four equal annual payments at an annual compound rate of 15%. It is anticipated that the tank will be used for 9 years and then sold for $3,000. Annual operating and maintenance expenses are estimated to be $9000/year. Savings of $15,000/year are estimated over the present filtration system. The firm uses a MARR of 15% for its economic analyses. Perform a sensitivity analysis to determine the effects on the economic feasibility of the plan due to errors in estimating the annual operating and maintenance costs, as well as the savings. Use a range of (-30%, +30%) with intervals of 10%. 2. (20 points) Initial estimates of the parameters for an investment are given below Parameter Initial Estimate Sensitivity Initial Investment 15000 None Net annual receipts 2500 -30%, 0%, +30% Project life 10 years -20%, 0%, +20% Salvage value $500 -50%, 0%, +50% You wish to do multiparameter sensitivity analysis based on the sensitivities shown. AW is the preferred measure of worth. MARR = 10% 3. (20 points) A snow resort group is considering investing in a ski resort at the Poconoâs Mountains. The initial investment required is $3 millions but the revenues and operating costs depends on the number of days of the winter season. The number of days of the winter season depends on the weather and consequently is subject to uncertainty, which is estimated to be normally distributed with a mean of 210 days and a standard deviation of 15 days. Each day that the resort operates generates revenues of $6000. The operating and maintenance costs of the first year are estimated to be $500,000 but they increase each year based on usage of the facility, which is a random variable. The salvage value also depends on the usage of the facility and is uncertain. The probability distributions of the incremental cost per…
? All your answers must be completed in Excel 1. (20 points) Growth Fertilizer purchases a gravity settling tank by borrowing the $50,000 purchase price. The loan is to be repaid with four equal annual payments at an annual compound rate of 15%. It is anticipated that the tank will be used for 9 years and then sold for $3,000. Annual operating and maintenance expenses are estimated to be $9000/year. Savings of $15,000/year are estimated over the present filtration system. The firm uses a MARR of 15% for its economic analyses. Perform a sensitivity analysis to determine the effects on the economic feasibility of the plan due to errors in estimating the annual operating and maintenance costs, as well as the savings. Use a range of (-30%, +30%) with intervals of 10%. 2. (20 points) Initial estimates of the parameters for an investment are given below Parameter Initial Estimate Sensitivity Initial Investment 15000 None Net annual receipts 2500 -30%, 0%, +30% Project life 10 years -20%, 0%, +20% Salvage value $500 -50%, 0%, +50% You wish to do multiparameter sensitivity analysis based on the sensitivities shown. AW is the preferred measure of worth. MARR = 10% 3. (20 points) A snow resort group is considering investing in a ski resort at the Poconoâs Mountains. The initial investment required is $3 millions but the revenues and operating costs depends on the number of days of the winter season. The number of days of the winter season depends on the weather and consequently is subject to uncertainty, which is estimated to be normally distributed with a mean of 210 days and a standard deviation of 15 days. Each day that the resort operates generates revenues of $6000. The operating and maintenance costs of the first year are estimated to be $500,000 but they increase each year based on usage of the facility, which is a random variable. The salvage value also depends on the usage of the facility and is uncertain. The probability distributions of the incremental cost per…
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