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A new software package is expected to improve productivity at Suretown Insurance. However, because of training and implementation costs, savings are not expected to occur until the third year of operation. Annual savings of approximately $10 000 are expected, increasing by about $1000 per year for the following five years. After this time (eight years from implementation), the software will be abandoned with no scrap value. Construct a sensitivity graph showing what would happen to the present worth of the software with 7.5 percent and 15 percent increases and decreases in the interest rate, the $10 000 base savings, and the $1000 savings gradient. MARR is 15 percent. (Hint: Create a table that has 3 parameters of base savings, savings gradient and interest rate. Compute values of these for +/- 15% and 7.5% of the base case. Find present worth equation for the base case. Then using these values and your present worth

A new software package is expected to improve productivity at Suretown Insurance. However, because of training and implementation costs, savings are not expected to occur until the third year of operation. Annual savings of approximately $10 000 are expected, increasing by about $1000 per year for the following five years. After this time (eight years from implementation), the software will be abandoned with no scrap value. Construct a sensitivity graph showing what would happen to the present worth of the software with 7.5 percent and 15 percent increases and decreases in the interest rate, the $10 000 base savings, and the $1000 savings gradient. MARR is 15 percent. (Hint: Create a table that has 3 parameters of base savings, savings gradient and interest rate. Compute values of these for +/- 15% and 7.5% of the base case. Find present worth equation for the base case. Then using these values and your present worth

Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter10: Statistics
Section10.6: Summarizing Categorical Data
Problem 23PPS
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A new software package is expected to improve productivity at Suretown Insurance. However, because of training and implementation costs, savings are not expected to occur until the third year of operation. Annual savings of approximately $10 000 are expected, increasing by about $1000 per year for the following five years. After this time (eight years from implementation), the software will be abandoned with no scrap value. Construct a sensitivity graph showing what would happen to the present worth of the software with 7.5 percent and 15 percent increases and decreases in the interest rate, the $10 000 base savings, and the $1000 savings gradient. MARR is 15 percent. (Hint: Create a table that has 3 parameters of base savings, savings gradient and interest rate. Compute values of these for +/- 15% and 7.5% of the base case. Find present worth equation for the base case. Then using these values and your present worth
Transcribed Image Text:A new software package is expected to improve productivity at Suretown Insurance. However, because of training and implementation costs, savings are not expected to occur until the third year of operation. Annual savings of approximately $10 000 are expected, increasing by about $1000 per year for the following five years. After this time (eight years from implementation), the software will be abandoned with no scrap value. Construct a sensitivity graph showing what would happen to the present worth of the software with 7.5 percent and 15 percent increases and decreases in the interest rate, the $10 000 base savings, and the $1000 savings gradient. MARR is 15 percent. (Hint: Create a table that has 3 parameters of base savings, savings gradient and interest rate. Compute values of these for +/- 15% and 7.5% of the base case. Find present worth equation for the base case. Then using these values and your present worth
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