Lecture No17 c5.ppt - Contemporary Engineering Economics 4...

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Contemporary Engineering Economics, 4 th edition, © 2007 Variations of Present Worth Analysis Lecture No.17 Chapter 5 Contemporary Engineering Economics Copyright © 2006
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Contemporary Engineering Economics, 4 th edition, © 2007 Future Worth Criterion Given : Cash flows and MARR ( i ) Find : The net equivalent worth at a specified period other than “present”, commonly the end of project life Decision Rule : Accept the project if the equivalent worth is positive. $75,000 $24,400 $27,340 $55,760 0 1 2 3 Project life
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Contemporary Engineering Economics, 4 th edition, © 2007 Example 5.6 Net Future Worth at the End of the Project
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Contemporary Engineering Economics, 4 th edition, © 2007 FW F P F P F P FW F P FW ( $24, ( / , ) $27, ( / , ) $55, ( / , ) $119, ( $75, ( / , ) $114, ( $119, $114, $5, , 15%) 400 15%,2 340 15%,1 760 15%,0 470 15%) 000 15%,3 066 15%) 470 066 404 0 inflow outflow Accept Alternate Way of Computing the NFW
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Contemporary Engineering Economics, 4 th edition, © 2007 A B C 1 Period Cash Flow 2 0 ($75,000) 3 1 $24,400 4 2 $27,340 5 3 $55,760 6 PW(15%) $3553.46 7 FW(15%) $5,404.38 =FV(15%,3,0,-B6) Excel Solution:
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Contemporary Engineering
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