Perform a two-parameter sensitivity analysis

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Reference no: EM13774416

An investment of $1.5 million is made at time zero with annual revenues of $600,000 in year 1, growing at a rate of 15% annually over a seven-year horizon. Annual operating and maintenance costs are estimated at $150,000 per year increasing every year by $10,000 thereafter. The salvage value of the investment is $1 million at the end of year 7. There is uncertainty about the estimates of the revenues and the salvage value, therefore you are asked to perform a two-parameter sensitivity analysis (before tax) to determine the range of feasibility of the variation of those parameters. The company uses a MARR of 15%.

Reference no: EM13774416

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