The city of St. John’s is installing a new swimming pool in the east end recreation centre.  One design being considered is a reinforced concrete pool that will cost $5,100,000 to install.  Thereafter, the inner surface of the pool will need to be refinished and painted every 5 years at a cost of $460,000 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 5%.  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] [1/25] 5,100,000  [1/25] [1/25] 
Refinishing Costs  [1/25]   [1/25]460,000  [1/25]   [1/25] 
MARR [%]   [1/25]  [1/25] 5  [1/25]   [1/25] 
Present worth of Costs-10%-5%0%+5%+10%
Changes to Construction Costs   [1/25]   [1/25]6.765E6  [1/25]   [1/25] 
Changes to Refinishing Costs   [1/25]  [1/25] 6.765E6  [1/25]   [1/25] 
Changes to MARR  [1/25]   [1/25] 6.765E6  [1/25]   [1/25] 

(b)  To which parameter (Construction Costs [CC], Refinishing Costs [RC], or MARR is the present worth of the project most sensitive? {Enter either ‘CC’, ‘RC’, or ‘MARR’ and the answer is case sensitive}:        [1/25]

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