Lecture 2.8_BC ratio_1OCT2018_ARH.pdf - L2.8 Benefit-Cost Analysis Angela Harris CE250 Model 2 Engineering Economics 1 OCT 2018 1 Checking in \u2022

Lecture 2.8_BC ratio_1OCT2018_ARH.pdf - L2.8 Benefit-Cost...

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L2.8- Benefit-Cost Analysis Angela Harris CE250 Model 2: Engineering Economics 1 OCT 2018 1
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Checking in Finishing the module on Wednesday Will receive a study guide on Wednesday Exam on Monday, Oct. 8 HW solutions will be posted 2
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Annual Cash Flow Analysis Our goal is to convert money to an equivalent uniform annual cost or benefit. EUAC: Equivalent uniform annual cost EUAB: Equivalent uniform annual benefit EUAW: Equivalent uniform annual worth EUAW = EUAB - EUAC
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Initial dispursement, P followed by salvage value, S EUAC= P(A/P, i, n)-S(A/F), i, n) EUAC =(P-S)(A/F,i,n)+Pi EAUC =(P-S)(A/P,i,n)+Si 4 Capital Recovery Cost of the project
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Relationship between NPW and EUAW There is a direct relationship between the net present worth and equivalent uniform annual worth. EUAW = NPW * (A/P, ! , n)
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Analysis Period in Annual Cash Flow Analysis Still important consideration Common multiple of alternative lives->can compare flows computed for alternatives based on their own service lives
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