Question

Please show all workings, There is additional data in the table for percentages but there is no additional data besides what is presented

The city of St. John's is intalling a new swimming pool in the east end recreation centre. One design being considered is a reinforced concrete pool that will cost $4,100,000 to install. Thereafter, the inner surface of the pool will need to be refinished and painted every 5 years at a cost of $440,000 per refinishing. Assuming that the pool will have essentially an infinite life, what is the present worth of the costs associated with the pool design? The city uses a MARR of 4%. If the installation costs, refinishing costs, and MARR are subject to 5% or 10% increases or decreases, how is the present worth affected? (NOTE: Text answers are case sensitive and every field in this question is worth equal value) All calculations are performed using 4 significant figures. (a) Complete the table below: Sensitivity Analysis Calculated Values Parameter -10% -5% Base Case +5% +10% Construction Costs - _ [1/25] 11 [1/25] ||4,100,000 [125) _[1/25] Refinishing Costs - [1/25] [1/25] [1/25] _ [1/25|| 440,000 __ [1125 4 . MARR [%] [1/25 (1/25) [112 [1/25] (1/25] Present I worth of Costs -10% -10% +10% +10% Changes to Construction Costs [1/25) _ [1/256.131E6 _[1/25] [1/25] Changes to Refinishing Costs [1/25 _1296 13150 _ [1/25) || 6.131E6 1 _ [1/25] 25 (1/25] Changes to IIMARR [1/25] _ [1/25) || 6.131E6 _[1/25] [1/25]

Answer 1

The solution to the problem is explained below

Given data First Cost = $4,100,000 Disbursements = $440,000; i-4% = 0.04 Let us draw the cash flow diagram. Since the asset has infinite life. I & & & & & & Present worth is nothing but Capitalised cost $4100000 - 440000 (hely capitalised Cost = First cost + [Disbursement /i]. Case 1: At i= 4%. cc = 4,100,000 + (440000 (A/F,4,5)70.04. cc = $6,130,600 [The Present worth of the asset]. Case 2: With a variation of 5% and 10% increase & decrease of values of construction, refining costs and MARR percentage. Parametar -10% -5%) Base (0) +5%. (3) (4) + 10%. Construction Cost 3690000 3895000 4100000 4305000 4510000 Refining 396000 418000 440000 462000 484000 MARRI 3.6 3.8 48 4.2 4.4 Present waith. 5737100 59340326130600 6327798 6524730 sample calculation. For sample (1) , Rough work. CG= 3690000+ [396000 (A/F, 3. 6,5)/0.036. For odd values of i formula working out similarly for samphe (2), (3) 5 (4) C & $593 4032 | (Alf, 3-6,5) = i CC(3) = $6327798 CC (4) = $6524730 CCC) $5737100. Costa isto be used 67 Citign = 0.03 (1.03193-1=001861