Determine if the selection of system GH or B3 is sensitive to variation in the return required by management. Depending on the type of project, the corporate MARR ranges from 8% to 16% per year on different projects. (a) Write the AW equations to find the values by hand. (b) Solve using a spreadsheet at 2% increments, develop the AW versus MARR graph, and find the breakeven MARR between GH and B3.
(a) AW relations are written for MARR values between 8% and 16%
AW1 = -50,000(A/P,i,4) – 6,000 + 30,000(A/F,i,4) – 17,000(P/F,i,2)(A/P,i,4)
AW2 = -100,000(A/P,i,12) – 1,500 – 30,000(P/F,i,6)(A/P,i,12)
(b) Selection changes between MARR values of 14% and 16%. Graph and Goal Seek determine the MARR breakeven point at 13.9% per year.
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