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decker scientific is considering an investment of$850,000 in a new product line. the company will make the investment only if it will result in a rate of return of 20% per year or higher. if the revenue is expected to be between $290,000 and $325,000 per year for each of 5 years, determine if the decision to invest is sensitive to the projected range of income using an annual worth analysis.

Sagot :

As Company will not invest in both cases, decision to invest is not sensitive over this annual revenue range.

In the given question, Decker scientific is considering an investment of $850,000 in a new product line.

The company will make the investment only if it will result in a rate of return of 20% per year or higher.

If the revenue is expected to be between $290,000 and $325,000 per year for each of 5 years, we have to determine if the decision to invest is sensitive to the projected range of income using an annual worth analysis.

AW of investment when expected revenue is

290000 = -1080000*(A/P,20%,4) + 290000

A/P = -1080000*0.386289 + 290000

A/P = -127192.12

A/P = -127192

AW of investment when expected revenue is

369000 = -1080000*(A/P,20%,4) + 369000

A/P = -1080000*0.386289 + 369000

A/P = -48192.12

A/P = -48192

As Company will not invest in both cases, decision to invest is not sensitive over this annual revenue range.

To learn more about revenue range link is here

brainly.com/question/29586643

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