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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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