Please enable JavaScript.

Coggle requires JavaScript to display documents.

EGB387 Lecture W6 - Option Analysis Using Present Worth, Future Worth and…

- - - - Only one can be selected
    - - More than one can be selected
  - - - First cost, P
      - Expected life, n
      - Effective interest rate or rate of return, i
      - Salvage value, S, or market value, MV
      - Annual operating costs, AOC, or maintenance & operating costs, M&O Major upgrade or rework cost
- - - - Assumptions
        
        Service provided is needed over the LCM or more years
        
        Selected alternative can be repeated over each life cycle of LCM in exactly the same manner
        
        Cash flow estimates are the same for each life cycle
      - Procedure
      - Selection
- - - - CR = -P(A/P,i%,n) + S(A/F,i%,n)
- - - - activities prior to delivery, including requirements definition, preliminary and detailed design