Parameter Initial Estimate Sensitivity Initial Investment $15,000 None Net Annual Receipts $2,500 -30%, 0%, +30% Project Life 10 years |-20%, 0%, +20% Salvage Value $500 |-50%, 0%, +50% MARR 15% рer year none

Parameter Initial Estimate Sensitivity Initial Investment $15,000 None Net Annual Receipts $2,500 -30%, 0%, +30% Project Life 10 years |-20%, 0%, +20% Salvage Value $500 |-50%, 0%, +50% MARR 15% рer year none

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 2BE

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Question

Based on a present worth measure of worth, complete a multi-parameter sensitivity analysis that examines all possible combinations of the estimates. Initial estimates of the parameters for an investment are given below. You wish to do a multiparameter sensitivity analysis based on the sensitivities shown. AW is the preferred measure of worth. a. How many values of AW need to be calculated? b. Determine the AW values.

Parameter
Initial Estimate Sensitivity
Initial Investment
$15,000
None
Net Annual Receipts
$2,500
-30%, 0%, +30%
Project Life
10 years
|-20%, 0%, +20%
Salvage Value
$500
|-50%, 0%, +50%
MARR
15% рer year
none

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