2b - Engineering Economics

2b - Engineering Economics - Equivalent Uniform Annual Cost...

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  CE 332  Page 1 Equivalent Uniform Annual Cost  (EUAC)
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   CE 332 Page 2 Equivalent Uniform Annual Cost Comparison of alternative can be done  in many ways.   We already looked at the comparison of  alternatives based on present worth. Another way is to look at the annuity Both have value as an analysis tool, but  the use of PW is limited
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   CE 332 Page 3 Comparison of Alternatives Alternatives with the  same life  Alternatives with  different lives Perpetual life PW or EUAC EUAC EUAC
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   CE 332 Page 4 Example 1 Alternative 1: P 0 = ? $55,000 $750 $5,000 15 P 0 = 55000 + [750 (P/A,6,12) (P/F,6,3)] - 5000 (P/F,6,15) P 0 = 55000 + [750 (8.3838)(0.8396)] - 5000 (0.4173) P 0 = $58,193 i = 6% 4
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   CE 332 Page 5 Example 1 (cont.) Alternative 2: P 0 = ? $40,000 $2,000 15 P 0 = 40000 + [3000 (P/A,6,12)(P/F,6,3)] - 2000 (P/F,6,15) P 0 = 40000 + [3000 (8.3838)(0.8396)] - 2000 (0.4173) P 0 = $60,283 4 $3000 i = 6%
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   CE 332 Page 6
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2b - Engineering Economics - Equivalent Uniform Annual Cost...

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