November_6th_Lecture_cee3000 - Steps-PVBi PVCi-PVBi/PVCi...

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Cee 3000 November 6 th Lecture -not present value/worth approach will ALWAYS give the correct answer Relative Value (Worth) 1. NPV or NPW 2. Least Cost Planning 3. Annual worth Method 4. B/C 5. ROR 1. NPW = PVBi- PVCi Whichever alternative gives you the largest NPW recommended 2. PVCi whichever alternative gives you the least cost 3. EAUi = EUABi- EUACi For unequal project lives 4. Benefit/Cost Analysis
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Unformatted text preview: Steps-PVBi + PVCi-PVBi/PVCi ≥ 1.0-arrange alternatives in ascending order -starting with lowest cost alternative compare to next highest costs alternative Incremental B/C = (PVBhighestcost – PVBlowercost)/ (PVChighestcost – PVClowestcost) ≥ 1.0 higher costs alternative dominates lower cost alternative-continue for all feasible alternatives...
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