Equal annual payments at annual compound rate

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Reference no: EM131074653

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 increasing by $500 per year thereafter. Savings of $15,000/year are estimated over the present filtration system increasing by 3% per year thereafter. The firm uses a MARR of 15% for its economic analyses. Perform a before tax cash flow sensitivity analysis to determine the effects on the economic feasibility of the plan due to errors in estimating the annual operating and maintenance costs, initial investment, and savings. Use a range of (-30%, +30%) with intervals of 10%.

Reference no: EM131074653

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