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Save Homework: Chapter 11 - Breakeven and Sensitivity (Revised) Score: 0 of 1 pt 3 of 4 (2 complete) Problem 11-10 (algorithmic) HW Score: 50%, 2 of 4 pt Question Help A nationwide motel chain is considering locating a new motel in Bigtown, USA. The cost of building a 130-room motel (excluding furnishings) is $4.8 milion. The firm uses a 15-year planning horizon to evaluate investments of this type. The furnishings for this motel must be replaced every five years at an estimated cost of $1.875.000 ( 0,5 and 10). The old furnishings have no market value Annual operating and maintenance expenses for the facilitare estimated to be $125.000. The market value of the motelafer 15 years is estimated to be 15% of the original building cost. Rooms at the motel are projected to be rented at an average rate of $50 per night. On the average, the motel wil rent 55% of its rooms each night. Assume the motel will be open 365 days per year. MARR is 8% per year. a. Using an annual-worth measure of merit, is the project economically attractive? b. Investigate sensitivity to decision reversal for the following three factors (1) capital investment (2) MARR, and (3) occupancy rate (average percent of rooms rented per night). To which of these factors is the decision most sensitive? Assume that the market value remains constant at the amount used in part a. c. Graphically investigate the sensitivity of the AW to changes in the above the factors. Investigate changes over the interval 40%. On your graph, use percent change as the x-axis and AW as the y-axis Click the icon to view the interest and annuity table for discrete compounding when the MARR is 8% per year. AW(8%) - $ 176 thousand (Round to one decimal place.) Based on the AW value, the project is economically feasible Sensitivity with respect to Decision Reversal b. Investigate sensitivity to decision reversal. (Round to one decimal place.) Factor Capital investment MARR I all @ Q Search Discrete Compounding; i = 8% Single Payment Uniform Series Compound Compound Sinking Amount Present Amount Present Fund Factor Worth Factor Factor Worth Factor Factor To Find F To Find P To Find F To Find P To Find A Given P Given F Given A Given A Given F FIP PIF PIA AF 1.0800 0.9259 1.0000 0.9259 1.0000 1.1664 0.8573 2.0800 1.7833 0.4808 1.2597 0.7938 3.2464 2.5771 0.3080 1.3605 0.7350 4.5061 3.3121 0.2219 FIA Capital Recovery Factor To Find A Given P AIP 1.0800 0.5608 0.3880 0.3019 @ Q Search 1.3605 1.4693 1.5869 1.7138 1.8509 1.9990 2.1589 2.3316 2.5182 2.7196 2.9372 3.1722 0.7350 0.6806 0.6302 0.5835 0.5403 0.5002 0.4632 0.4289 0.3971 0.3677 0.3405 0.3152 4.5061 5.8666 7.3359 8.9228 10.6366 12.4876 14.4866 16.6455 18.9771 21.4953 24.2149 27.1521 3.3121 3.9927 4.6229 5.2064 5.7466 6.2469 6.7101 7.1390 7.5361 7.9038 8.2442 8.5595 0.2219 0.1705 0.1363 0.1121 0.0940 0.0801 0.0690 0.0601 0.0527 0.0465 0.0413 0.0368 0.3019 0.2505 0.2163 0.1921 0.1740 0.1601 0.1490 0.1401 0.1327 0.1265 0.1213 116