Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 15

Kahn Instruments is considering an investment of $500,000 in a new product line. The company will make the investment only if it will result in a rate of return of 15% per year or higher. If the revenue is expected to be between $135,000 and $165,000 per year for 5 years, determine if the decision to invest is sensitive to the projected range of income using a present worth analysis.