You are considering buying a new SUV for your late-night beer delivery service. The SUV will cost $25,000, with a salvage value of $5,750 after five years. The vehicle will be used to travel 30,000 miles per year. You expect to have a yearly income of $100,000 based on the business plan. On average, the SUV yields 21 miles per gallon and fuel price is estimated at $0.65 per liter. Other O&M costs associated with the business total $40,000 per year including labor, repairs, insurance, etc. Your company’s MARR is 18%. Use a five year planning horizon.
a. Provide a detailed formula (using the factors) to compute the PW for this vehicle. Provide the PW of this project and comment on its desirability.
b. Create a single Spider Diagram that shows the PW effect of varying all the information provided in the problem (one variable at the time) as the one presented in your manual.
c. State if each input data varied in part b affects the PW in a positive or negative way and if you consider the PW to be sensitive to that input data or not.