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]
