PS 17 - Sensitivity Analysis

PS 17 - Sensitivity Analysis - Alternative A Alternative B...

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IE 150 Problem Set 17 Sensitivity Analysis Instructions:  Write/Type/Print your answers on yellow pad or bond paper (NO A4’s). Use a different sheet per  problem.  Use phrases  to describe what you are doing. Do not present it as just a series of equations and  numbers.  Label each step. Ex: “Step 1: Set-up the Total Revenue Equation”, “Step 4: Solve for the NPV”.  Box the final answers.  Use clear formatting: Indent at each step. Show your answers in just 1 column. (The problem set  will be read from top to bottom, and not top bottom diagonal right bottom.) Consider the following two investment alternatives. Assume that MARR = 10%.
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Unformatted text preview: Alternative A Alternative B Capital Investment 10000 12000 Net Annual Receipts 4500 3400 Market Value 2500 5000 Useful Life 7 years 9 years Problem 1: Perform Sensitivity Analysis for alternative A for changes from -50% to +50% (with each increment at 10%) a) Capital Investment b) Net Annual Receipts c) Market Value Problem 2: Construct the O-ML-P table for alternative B considering capital investment, net receipts and market value. The optimistic values for the each factor are a positive change by 20%, while the pessimistic values are a negative change by 40%....
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