# A new project will cost $80,000 initially and will last for seven years, at which time its...

## Question:

A new project will cost $80,000 initially and will last for seven years, at which time its salvage value will be $2,500. Annual revenues are anticipated to be $15,000 per year. For a MARR of 12%/yr, plot a sensitivity graph for annual worth versus initial cost, annual revenue, and salvage value, varying only one parameter at a time, each within the range of +/- 50%.

## Sensitivity Analysis

Sensitivity Analysis helps to stress test the project. Sensitivity Analysis helps us to analyse the changes and their impact which may take place due to change in factors like initial cost, annual revenue etc.

## Answer and Explanation: 1

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View this answerAnnual worth means the annual equivalent cash flow of the expected cash inflows and cost related to the project.

Table of Present Value

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Chapter 9 / Lesson 1Explore sensitivity analysis. Learn the definition of sensitivity analysis and understand how it is done. Discover the various benefits of sensitivity analysis.

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