Ch6 - 6 Comparing Alternatives: Annual Cash Flow Analysis...

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6 Comparing Alternatives: Annual Cash Flow Analysis
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Objectives • Define equivalent uniform annual cost (EUAC) and equivalent uniform annual benefits (EUAB) • Resolve an engineering economic analysis problem into its annual cash flow equivalent • Conduct annual worth analysis for a single investment • Use EUAC and EUAB to compare alternatives with equal, common multiple or continuous lives, or over some fixed study period
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Annual Cash Flow Calculations • Resolving a Present Cost P into an Annual Cost: EUAC = P (A/P,i%,n) • Resolving a Salvage Value S into an Annual Benefit: EUAB = S (A/F,i%,n) • Resolving a Salvage Value S into an Annual Cost: EUAC = - EUAB = - S (A/F,i%,n)
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Annual Cash Flow Calculations • Resolving both a Present Cost P and a Salvage Value S into an Annual Cost: EUAC = P (A/P,i,n) - S (A/F,i,n) Or EUAC = (P - S) (A/F,i,n) + Pi Or EUAC = (P - S) (A/P,i,n) + Si (note: (A/P,i,n) = (A/F,i,n) + i) EUAC calculated above is also called Capital Recovery Cost
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Annual Cash Flow Analysis Maximize (EUAB – EUAC)
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This note was uploaded on 12/07/2011 for the course ENGR 301 taught by Professor Gg during the Fall '11 term at Concordia Canada.

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Ch6 - 6 Comparing Alternatives: Annual Cash Flow Analysis...

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